TIDMZAIM
RNS Number : 8370L
ZAIM Credit Systems PLC
18 May 2022
For Immediate Release
18 May 2022
Zaim Credit Systems Plc
("Zaim" or the "Group")
Audited financial results for the year ended 31 December
2021
Zaim Credit Systems plc (the 'Group' or 'Zaim'), the fintech
group, is pleased to announce its audited financial results for the
year ended 31 December 2021.
Key highlights
-- Total loans issued increased by 153% to GBP26.1m (2020:
GBP10.3m)
-- Loans issued online to grew by 4.9 times to GBP23.1m (2020:
GBP4.8m)
-- Zaim continued to gain market share in a rapidly growing
sector (local market portfolio increased by 32% in 2021 compared to
2020 )
-- Adjusted EBIT profit grew to GBP1,001k in 2021 (2020: loss of
GBP125k)
-- Group Net Profit of GBP683k in 2021 (2020: net loss of
GBP615m)
-- Cash and cash equivalents increased by 130% to GBP1,474k in
2021 (2020: GBP641k)
-- In December 2021 84.1 % of loans issued were via online
channels, 9.2% via the mobile application and 6.7% were issued via
the retail network. This compares to 9% issued online in 2019, 91%
issued offline and 0% via the mobile application (launched during
2021)
-- Zaim achieved sustainable profitability combined with a rapid
growth of the business in line with its business plan
-- Online-focused business model demonstrated the resilience and
adaptability of the Group which is now well placed to meet
macroeconomic challenges and capitalise on further growth
Financial highlights
2021 2020 Change
GBP'000 GBP'000 %
------- ------- ------
Loans issued during the
period 26,084 10,290 153
------- ------- ------
Interest income 9,544 4,857 96
------- ------- ------
Staff costs 1,567 1,810 (13)
------- ------- ------
Operating expenses 2,623 2,116 24
------- ------- ------
Net profit / (loss) 683 (615) n/a
------- ------- ------
Adjusted EBIT1 for the period 1,001 (125) n/a
------- ------- ------
31 December 2021 31 December 2020 Change
GBP'000 GBP'000 %
---------------- ---------------- ------
Total outstanding loans
measured at amortised
cost 2,825 1,269 123
---------------- ---------------- ------
Cash and cash equivalents 1,474 641 130
---------------- ---------------- ------
Zaim's CEO, Siro Cicconi commented:
"I am pleased to announce very strong set of results of our
business in 2021. During the COVID-19 quarantine period in Q2 2020,
the Group rapidly accelerated the shift in its new business model
towards remote lending via the Internet, which resulted in a
significant increase in access to our products without the need to
visit our stores and at the same time decreasing the fixed cost
base. The Group proceeded to optimise the physical store business,
including the closure of loss-making outlets and moved forward
focusing the majority of the Group's resource towards the online
business.
In Q2 2021, the Group launched the new sales channel - its own
branded mobile application. This development not only allowed us to
better understand our customers, but became an important source of
the new business: in December 2021, the share of loans issued via
the mobile app reached 9.2%, exceeding the share of loans issued
via offline retail stores (6.7%). Total share of loans issued
online and via the mobile platform reached 93.3%, which signifies
completion of the transition towards online-centered business
model.
This transition was executed well and I am pleased with the
results, demonstrated by the strong growth combined with a high
profitability during 2021. We have significantly outgrown the
market by increasing the value of the loans issued by 153% in 2021
compared to 2020, while the local microloans market increased only
32% year-on-year. What is more impressive that the amount of loans
issued online (both desktop and mobile platform grew by 4.9 times
to o GBP23.1m (2020: GBP4.8m), while the online microloans
portfolio in the local microfinance market only doubled.
While it is impossible to predict the full consequences of the
"special military operation" of Russia in Ukraine, it is worth
mentioning that the Directors and the management of Zaim have a
successful track record of managing challenging situations by
reacting swiftly and decisively. As an example, developing and
implementing the new strategy during COVID-19 restriction, our team
had evolved Zaim from a traditional microfinance organisation into
a rapidly developing, and profitable fintech company.
I would like to cordially thank the management, employees,
consultants and my fellow board members for their hard work and
dedication in delivering these tremendous results and turning the
company into a rapidly growing and profitable business. I believe
that the vast experience and dedication of the Board and management
team coupled with our low fixed cost highly scalable business model
will help us to run the business in a challenging economic
environment in the interests of all our stakeholders providing best
in class fast and flawless digital services."
A copy of the Report and Accounts will be available on the
Company's website, www. zaimcreditsystemsplc .com/english and also
from the National Storage Mechanism.
Follow us on Twitter - @ZaimcreditSyst
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Enquiries:
Zaim Credit Systems Plc
Simon Retter
Siro Cicconi Tel: +44 (0) 73 9377 9849
Alex Boreyko Tel: +7 925 708 98 16
investors@zaimcreditsystemsplc.com
Investor Relations: Flowcomms
Ltd
Sasha Sethi Tel: +44 (0)7891 677441
sasha@flowcomms.com
Adviser: Beaumont Cornish
Limited
Roland Cornish / James Biddle Tel: +44 (0) 20 7628 3396
Optiva Securities Limited
Vishal Balasingham Tel: +44 (0) 20 3137 1902
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Chairman's Statement
Dear Shareholders,
Digital and online services are becoming increasingly important
in our everyday life. The trend of moving traditional activities
online has been around for a number of years and it was further
accelerated by the COVID-19 pandemic and quarantine measures taken
by the authorities of most countries in 2020 and 2021. Now a
significant part of our lives - including shopping, education,
entertainment, and dining - has moved online.
Being able to access so many services through an "app" on your
phone has revolutionised consumer markets around the world,
dramatically increasing the ease, speed and range of transactions.
Hundreds of millions of people are benefiting. However, those who
are left behind, who do not have online banking facilities, are
going to end up excluded from the new age, and their sense of
exclusion and actual exclusion may end up worse than before. One
example of how this works is freelancers or people with irregular
income: they are vulnerable and underserved by traditional
financial services providers. Loans available to such individuals
are often subject to credit or income scoring that penalises those
who have variable incomes.
Seeing this large group of people being excluded from the modern
online world, we have set ourselves the mission to tackle problems
experienced by "unbankable" individuals and to provide them with
access. For example, Zaim has created the Zaim MasterCard, an
inclusivity tool that can be easily issued and delivered to those
who lack the "key" to the modern online world.
In the middle of 2020, Zaim directors and management implemented
an online-focused strategy allowing customers to receive and repay
their loans online without physically attending our branches. By
December 2021, 93% of our loans were issued online, compared to
only 13% in January 2020 . This move increased our addressable
market beyond the Moscow region to include the rest of Russia and
it allowed "unbankable" individuals to receive their money in a few
minutes without leaving their homes. This strategy not only became
a perfect solution for the COVID-19 quarantine period, but also
allowed Zaim rapidly to scale up its business without significant
increase in its cost base, thereby driving profitable growth.
Another important product development and additional step for
financial inclusion was the launch of our Zaim-branded mobile
application in Q2 2021. This "app" allows people to receive and
repay loans within minutes using only mobile phones. This fintech
service means we can help people efficiently resolve their
temporary financial difficulties without the need for collateral or
guarantors and with funds usually delivered within a few
minutes.
Due to the successful implementation of its online-focused
growth strategy Zaim achieved impressive results in 2021. Zaim's
loans issued grew by 153% to GBP26.1 million, and net profit
improved from a loss of GBP615,000 in 2020 to a profit of
GBP683,000 in 2021.
The market in Russia still has a great potential. Russian
household debt in September 2021 was only 22% of the Russian GDP
compared to 88% in the UK and 79% in the USA(2) . Total loans
outstanding in the Russian market grew by over 31% to 328 billion
rubles (c. GBP3.87 billion) as at 31 December 2021. Online lending
in Russia had doubled reaching 108.6 billion (c. GBP1.28 billion)
rubles as at 31 December 2021.
Let me now turn to recent events in Ukraine and their impact on
Zaim. Firstly, we recognize with horror the devastating impact on
Ukrainians of the "special military operation". The conflict has
already brought difficulties for many Russians and we expect those
difficulties to mount. International sanctions are targeting
Russian-owned assets, wealthy people close to Vladimir Putin, and
Russian banks. Zaim is majority-owned by EU citizens, is
unconnected with the Russian government, and is not working with
Russian banks. The business of Zaim Express operates solely within
Russia and therefore is not affected by international restrictions
on using the SWIFT international payment system.
Zaim Express continues to serve its clients in the normal course
of business with as yet no significant deviation in business
performance. It is not possible to foresee how events will unfold
and the Company is closely monitoring the situation and considering
various scenarios. For the time and whilst the Board establishes
the position regarding the transfer of funds in and out of Russia,
the Board has decided to fund the Company and Zaim Express from its
respective existing cash resources; in this regard the Company
retains a balance of approximately GBP100,000 to meet its ongoing
financial liabilities.
In order to diversify and further develop its business, Zaim is
currently accelerating work to expand into nearby European
countries and is actively undertaking an assessment of
jurisdictions in which to deploy its technology.
Zaim's management team has faced and overcome a significant
number of challenges during the last eleven years, emerging
stronger. I hope we have gained enough experience to weather this
storm as well.
With this I would like cordially to thank our management,
employees, and consultants, and my fellow board members, for their
hard work and dedication in delivering these excellent results and
for transforming the Company into a rapidly growing and profitable
business.
We remain committed to strengthening our position as a leading
fintech company and will strive to keep delivering a fast and
flawless solution to all of our customers.
Malcolm Groat
Chairman
17 May 2022
Chief Executive's Review
Dear fellow Stakeholders,
It is very hard talking about business in such unprecedented and
difficult times. The Russian "special military operation" in
Ukraine launched on 24 February 2022 and subsequent sanctions
imposed by US, UK and EU against Russia changed our lives and
economic reality in an unprecedented way. Our thoughts and prayers
are for the peaceful resolution of the conflict.
Zaim's business is currently under no direct influence of
sanctions, though long-term consequences of the recent geopolitical
events for the Russian and global economy are still unclear. We
remain firmly committed to adhering to all our duties to our
stakeholders and customers. The Company's management believes it is
taking all necessary measures to maintain a sustainable position
and further develop the Company's business in the current
circumstances.
Over the past 11 years, Zaim has developed a bespoke IT system
that allows it to receive and repay loans remotely with an
automated scoring process taking less than 10 minutes to approve or
reject new applicants. Our investment in our proprietary platform
and process delivered impressive results.
In the second quarter of 2021 Zaim had successfully launched its
branded mobile application for both Android and iOS devises. It
allows customers to receive and repay the loans in a minute using
no more than their mobile phones. The launch of the mobile
application became an important milestone in the path of increasing
the Fintech content in our business model. In an ever increasingly
digital world this expansion of our online offering will bring more
people access to the financial products that many of us take for
granted.
Mobile app became an important sales channel responsible for
issuing 9.2% of the loans in December 2021, which was higher than
6.7% of the loans issued via the stores network. It reinforced
customer loyalty and created the opportunity to widen the knowledge
of our clients, understand their needs, attitudes and source
information and data that will drive Zaim in the creation of next
generation services. It also became a significant platform for
cross-selling of additional products, promotions and discounts.
Our online-focused business strategy bear fruit driving
impressive business performance with six consecutive quarters of
very strong profitable growth. This strategy allows for lower fixed
costs and faster growth that makes us confident in the long-term
development of our business.
As a result of above mentioned business developments we have
significantly outperformed a very fast-growing market: in 2021
Russian microfinance market grew by 31.6% year-on-year(3) , at the
higher rate than in pre-COVID 2019, whilst the amount of loans
issued by Zaim Express increased by more than 2.5 times(4) to
GBP26.1m.
Performance of o ur online business was the main driver for this
growth: loans issued online skyrocketed to GBP23.1m, which is 4.9
times higher than in 2020. In this respect, we also dramatically
outperformed the Russian market where total portfolio of the
microloans issued online doubled in 2021 compared to 2020. At the
same time Zaim loans issued offline decreased by 47% to GBP2.9m due
to closure of stores and transition to online-focused business
model. We have decreased the number of offline stores from 30 as of
31 December 2020 to 26 as of 31 December 2021.
Interest income grew by 96% to GBP 9.5m due to the higher amount
of loans issued. As Zaim issued 89% of loans via the internet in
2021 vs 47% in 2020, rental costs have decreased by 67% to GBP220
thousand and staff costs have decreased by 17% to GBP 1.3m, at the
same time advertising and marketing costs increased by 263% to GBP
979 thousand. Given 153% growth of the amount of loans issued, the
unit costs for issuing loans have decreased. The company plans to
further optimize the network operation, including abandoning
unprofitable sites, strengthening the Internet and mobile channels
for attracting customers.
As a result of dramatic growth in loans issued on the back of
decreasing unit costs Zaim bu siness turned to profi tability from
a loss of GBP615,000 in 2020 to a profit of GBP683,000 in 2021.
The business continues to be cash-generative, which we are
carefully reinvesting in order to serve a wider base of clients
with our online business. We continued our investments in growth,
being careful to maintain cash generation and profitability.
In the first quarter of 2022 the effective demand remained
strong and the business volumes continued to grow. Strong
fluctuation of exchange rate of Ruble vs GBP and other currencies
did not affect our business performance. It is important to remark
that such initial fluctuation seems to be, at the moment, more than
recovered as the current prevailing Ruble to GBP exchange rate is
higher than those observed pre-crisis. Given the operations are
wholly focussed on Russia at present, the ongoing performance
should not be influenced by foreign exchange rates.
The Directors and the management of Zaim have a successful track
record of turning crises into opportunities by reacting swiftly and
decisively. The last example of such pivot was the implementation
of online-focused business strategy and creating strong platform
for the profitable growth amidst the COVID-19 pandemics. As a
result, our team had evolved Zaim from a traditional microfinance
organisation into a rapidly developing and profitable fintech
company.
I am confident that the vast experience and dedication of the
Board and management team coupled with our low fixed cost highly
scalable business model will help us to run the business in a
challenging economic environment in the interests of all our
stakeholders providing best in class fast and flawless digital
services.
I would like to cordially thank our investors, employees and
clients for their support and dedication. We remain committed to
adding value and generating profitability for all of our
stakeholders.
Siro Donato Cicconi
CEO
17 May 2022
(1) Adjusted EBIT is calculated by taking profit (loss) for the
year adding back accrued interest and non-cash share-based payment
charges and one-off restructuring costs which are non-recurring
(2) According to the Bank for International Settlements
(3) According to the Central Bank of Russia's publication "
Microfinance market trends in 2021 ", growth of the portfolio of
microloans in 2021 was 31.6% compared to 2020
(4) Loans issued by Zaim Express in 2021 increased by 153% vs.
2020
Independent Auditor's Report to the Shareholders of Zaim Credit
Systems plc
We have audited the financial statements of Zaim Credit Systems
plc (the 'parent company)' and its subsidiaries (the 'group') for
the year ended 31 December 2021 which comprise the Consolidated
Statement of Profit or Loss and Other Comprehensive Income,
Consolidated and Company Statement of Financial Position,
Consolidated and Company Statement of Changes in Equity,
Consolidated and Company Statement of Cash Flows and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
UK-adopted International Accounting Standards. The financial
reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2021 and of the group's profit for the year then
ended;
-- the group and the parent company financial statements have
been properly prepared in accordance with International accounting
standards in conformity with the requirements of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006; and, as regards
the group financial statements, Article 4 of the IAS
Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the group
and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
note 3 to the financial statements concerning the Company and
Group's ability to continue as a going concern. The conditions
described in note 3 in respect of the Russian "special military
operation" in Ukraine indicate the existence of material
uncertainties which may cast doubt about the Company and Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Company and
Group was unable to continue as a going concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance on our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Risk Our response to the risk Our response and observation
Going concern
There is a risk that the We read the Directors' assessment The disclosures in
group may not be considered of the risks and impacts of the financial statements
a going concern as a result COVID-19 and the Russian invasion adequately reflect
of the impact of COVID-19 of Ukraine on the business. the Directors' conclusions
(Coronavirus) and the We compared this assessment around the material
Russian invasion of Ukraine. to our own understanding of uncertainties in respect
the risks, and the nature of the Russian invasion
of the group's operations, of Ukraine.
products and customer base.
We then conducted a review
of going concern in respect
of these two factors which
included reviewing forecasts
and current trading performance,
and carrying out stress testing.
The work undertaken considered
a period of at least twelve
months from the date of approving
these financial statements.
------------------------------------- --------------------------------
Recoverability of loans
to customers We understood the group's We did not identify
Given the extended credit process for estimating the any evidence of material
terms that were provided expected credit loss provision misstatement related
to customers, judgement under IFRS 9. Loans to customers to carrying value of
is required to establish were tested on a sample basis receivables. Management
how much of the loan receivables which included considering continue to apply an
balance is recoverable. the recoverability of the appropriate expected
There is a risk that management's balances post year end. Overdue credit loss provision.
judgements and estimates balances were discussed with
over recoverability are management and we assessed
inappropriate, when considering whether the accounting provision
the specific balances appropriately reflects the
and the requirements of facts and circumstances.
IFRS 9.
------------------------------------- --------------------------------
Risk of fraud in revenue
recognition We reviewed the group's revenue Revenue was recognised
There is a risk that revenue recognition policies and how in accordance with
is materially understated they are applied. Revenue the group's accounting
due to fraud. was then tested on a sample policy and we concluded
basis to confirm that transactions that no evidence of
have been appropriately recorded fraud or other understatement
in line with IFRS 15. was identified.
------------------------------------- --------------------------------
Risk that management
is able to override controls We examined journals posted We identified no evidence
Journals can be posted around the year end, specifically of management override
that significantly alter focusing on areas which are in respect of inappropriate
the financial statements. more easily manipulated. manual journals recorded
in any section of the
financial statements.
------------------------------------- --------------------------------
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be charged or
influenced. We use materiality both in planning and in the scope of
our audit work and in evaluating the results of our work.
We determine materiality for the group and the parent company to
be GBP113,779 and this financial benchmark, which has been used
throughout the audit, was determined by way of a standard formula
being applied to key financial results and balances presented in
the financial statements, being the key performance indicators of
turnover and profit before tax. Where considered relevant the
materiality is adjusted to suit the specific risk profile of the
group.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.
Performance materiality for both the group and the parent company
was set at 75% of the above materiality levels, which equates to
GBP85,334. We agreed with the audit committee that we would report
to the committee all individual audit differences identified during
the course of our audit in excess of GBP5,689. We also agreed to
report differences below these thresholds that, in our view
warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the
group and its environment, including the group's system of internal
control, and assessing the risks of material misstatement in the
financial statements at the group level.
Whilst Zaim Credit Systems plc is a company registered in
England & Wales and its head office is located in the UK, the
group's principal operations are located in Russia. In approaching
the audit, we considered how the group is organised and managed. We
assessed the activities of the group as being the issuance of
microfinance loans to Russian individuals.
Our group audit scope focused on the group's principal operating
subsidiary, being Zaim Express LLC, which was subject to a full
scope audit together with the parent company. Shipleys LLP
performed the audit of the parent company and BDO Unicon
Aktsionernoe Obshchevstvo performed the audit of the Russian
component.
The group audit team was actively involved in the direction of
the audit and specific audit procedures performed by the component
auditor along with the consideration of findings and determination
of conclusions drawn. As part of our audit strategy, we issued
group audit engagement instructions and discussed the instructions
with the component auditor. A senior member of the group audit team
met with the component auditor and local management performed a
review of the component audit files and we discussed the audit
findings with the component auditor.
Other Information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
In this context, matters that we are specifically required to
report to you as uncorrected material misstatements of the other
information include where we conclude that:
-- Fair, balanced and understandable - the statement given by
the directors that the y consider the annual report and financial
statements taken as a whole is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the groups' position and performance, business model and strategy,
is materially inconsistent with our knowledge obtained in the
audit; or
-- Audit committee reporting - the section describing the work
of the audit committee does not appropriately address matters
communicated by us to the audit committee; or
We have nothing to report in respect of these matters.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements and the part of the
directors' remuneration report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 40, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error. In preparing the financial
statements, the directors are responsible for assessing the
company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. Our approach was as
follows:
-- We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined the most
significant are those that relate to the reporting framework
(UK-adopted International Accounting Standards, the Companies Act
2006) and the relevant tax compliance regulations in the
jurisdictions in which the group operates.
-- We understood how Zaim Credit Systems plc is complying with
those frameworks by making enquiries on management, the Company
Secretary, and those responsible for legal and compliance
procedures. We corroborated our enquiries through our review of
board minutes, papers provided to the Audit Committee, discussion
with the Audit Committee and any correspondence received from
regulatory bodies.
-- We assessed the susceptibility of the group's financial
statements to material misstatement, including how fraud might
occur by enquiring with management and the Audit Committee during
the planning and execution phase of our audit. We considered the
programs and controls that the group has established to address
risks identified, or that otherwise prevent, deter and detect fraud
and how senior management monitors those programs and controls.
Where the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk including revenue
recognition as discussed above. These procedures included testing
manual journals and were designed to provide reasonable assurance
that the financial statements were free from fraud or error.
-- Based on this understanding we designed our audit procedures
to identify non-compliance with such laws and regulations
identified in the paragraphs above. Our procedures involved journal
entry testing, with a focus on manual journals and journals
indicating large or unusual transactions based on our understanding
of the business; enquiries of the Company Secretary and management;
and focused testing, as referred to in the key audit matters
section above.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at
https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
Other matters which we are required to address
We were initially appointed by the board on 23 October 2019 to
audit the financial statements for the period ending 31 December
2018. Our total uninterrupted period of engagement is 4 years,
covering the periods ending 31 December 2018 to 31 December
2021.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
BENJAMIN BIDNELL
For and on behalf of SHIPLEYS LLP, Chartered Accountants and
Statutory Auditor
10 Orange Street, Haymarket, London, WC2H 7DQ
17 May 2022
Zaim Credit Systems plc
Consolidated Statement of Financial Position as at 31 December
2021
(in British pounds sterling)
Assets
1, 4 73 ,
Cash and cash equivalents 5 909 640, 8 71
2,824 , 7
Loans to customers 6 1 7 1 ,269 ,313
Property and equipment 20,319 5,677
Right-of- use assets under lease agreements 7 539 , 709 297,925
Intangible assets 28 , 795 _
Other assets 8 455 , 579 25 1 ,2 97
5 , 343 ,
Total assets 028 2,465, 083
-------------------------------------------- ------- ------------- -------------
Liabilities
Loans received 9 1,304 ,6 80 735,646
Lease liabilities 7 533 ,6 83 347,216
1,2 8 4 ,
Other liabilities 10 312 823,830
3 , 122 ,6 1,906,6
Total liabilities 75 92
-------------------------------------------- ------- ------------- -----------
Equity
Charter capital 11 4,6 1 9,750 4,369,750
Shares to be issued Reserve 26 800 , 000 800 , 000
6,7 55 , 6
Additional capital 11, 2 5 28 6,078,128
Foreign currency translation reserve 11 4, 411 , 989 4, 3 90,225
2 2,9 64
Merger reserve 11, 26 2 2,9 64 ,800 ,800
Share options reserve 11 2 4 8 ,146 218 , 099
(3 7 , 579 (38, 262
Accumulated deficit 11 , 961 ) , 611 )
-------------------------------------------- ------- ------------- -----------
Total equity 2,220 , 353 558,391
-------------------------------------------- ------- ------------- -----------
5 , 343 ,0
Total liabilities and equity 28 2,465,083
-------------------------------------------- ------- ------------- -----------
Siro Donato Cicconi,
Chief Executive Officer
Simon James Retter,
Finance Director
17 May 202 2
Zaim Credit Systems plc
Company Statement of Financial Position as at 31 December
2021
(in British pounds sterling)
Company Registered number 11418575
Note 202 1 20 20
----------------------------- ---- ------------ ----------
Assets
Cash and cash equivalents 5 211 , 83 3 1 61 ,163
Other assets 8 130,076 126, 477
10 , 0 96
Investment in Subsidiary 1 10 , 438,409 ,089
10, 780 ,
Total assets 31 9 10,383,729
----------------------------- ---- ------------ ------------
Liabilities
Other liabilities 10 1 97 , 086 186,739
Total liabilities 1 97 , 086 186,739
----------------------------- ---- ------------ ----------
Equity
Charter capital 11 4,6 1 9,750 4,369,750
Shares to be issued Reserve 26 800 ,000 800 ,000
6,7 55 , 6
Additional capital 11 28 6,078,128
Share options reserve 12 248,146 218,099
(1 ,268
(1 ,840 , , 9 8 7
Accumulated deficit 292 ) )
----------------------------- ---- ------------ ----------
10, 583 ,
Total equity 232 10,196,990
----------------------------- ---- ------------ ----------
10, 7 8 0
Total liabilities and equity , 31 9 10,383,729
----------------------------- ---- ------------ ----------
The above Company Statement of Financial Position should be read
in conjunction with the accompanying notes, the loss for the period
was GBP57 1 , 3 0 5 (20 20 : GBP 576 , 000 ). As permitted by
section 408 of the Companies Act 2006, the statement of
comprehensive income of the Parent Company is not presented as part
of these Financial Statements.
The Financial Statements were authorised for issue by the Board
of Directors on 17 May 202 2 and were signed on its behalf
Siro Donato Cicconi,
Chief Executive Officer
Simon James Retter,
Finance Director
Zaim Credit Systems Group
Consolidated Statement of Profit or Loss and Other Comprehensive
Income for the Year Ended 31 December 2021
(in British pounds sterling)
9 , 544
Interest income 13 , 013 4,857,496
(1 54 ,
Interest expenses 674 ) (12,8 35 )
( 15 ,2
Interest expense - lease liabilities 13 28 ) (92,442)
------------------------------------------- -------- ---------- -------------
9 , 374
Net interest income , 1 1 2 4,752,218
Allowance for ECL/impairment of loans ( 6 , 534,
to customers 6 ,8, 15 1 46 ) (1, 790, 718)
Net interest income after allowance 2, 83 9,
for ECL/impairment of loans to customers 966 2,961,501
Gains less losses from dealing in (189 ,127
foreign currency 14 20 , 943 )
2,160 ,
Other operating income 16 73 5 590,502
------------------------------------------- -------- ---------- -------------
5 , 0 2
Operating income 1 , 644 3,362,875
(1, 567
Staff costs 17 , 055 ) (1,810,443)
( 30 , 047
Charge for share based options 12 ) (51,216)
(2, 623
Operating expenses 18 , 04 5) (2, 11 5,735)
801 , 4
Profit / (l oss) before income tax 9 7 (614,519)
Income tax expense 19 (118,847) -
------------------------------------------- -------- ---------- -------------
6 82 ,
Net profit / (loss) 6 5 0 (61 4 ,519)
------------------------------------------- -------- ---------- -------------
Net other comprehensive income that
may be reclassified to profit or loss
Foreign exchange differences arising 21 , 7 6
on translation into presentation currency 4 (67,563)
------------------------------------------- -------- ---------- -------------
Total comprehensive expense 704 , 415 (682,083)
------------------------------------------- -------- ---------- -------------
Earnings per share 11
Basic, profit/loss for the year attributable to
ordinary equity holders of the parent 0.18p 0.14p
Diluted, profit/loss for the year attributable to
ordinary equity holders of the parent 0.16p 0.14
Zaim Credit Systems Group
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2021
(in British pounds sterling)
Foreign
currency Share
Shares to translation Merger reserve options
be issued Additional reserve reserve Accumulated Total
Charter capital Reserve capital (FCTR ) deficit equity
-------------------------- ----------- ---------- ----------- ---------------- --------- ------------------ ---------
Balance at 31
December 2019 4,369,750 - 6,078,128 4,457,788 23 , 764 , 800 166,883 (37, 648 ,0 92 ) 1,189,258
---------------- --------- ----------- ---------- ----------- ---------------- --------- ------------------ ---------
Comprehensive
loss for 2020 - - - (67,563) - - (614,519) (682,083)
Contingent
consideration - 800 , 000 - - (800,000) - - -
Share-based
payments - - - - - 51,216 - 51,216
Balance at 31
December 20 20 4,369,750 800,000 6,078,128 4,390,225 22,964,800 218,099 (38, 262 , 6 1 1 ) 558,391
---------------- --------- ----------- ---------- ----------- ---------------- --------- ------------------ ---------
Issue of
odinary
shares 250 ,000 - 677,500 - - - - 927 ,500
Comprehensive
Income for
2021 - - - 21,764 - - 682,650 704,415
Share-based
payments - - - - - 30,047 - 30 , 047
Balance at 31
December 202
1 4,6 1 9,750 800,000 6,7 55 , 6 28 4, 411 , 989 22,964,800 248,146 (3 7 , 579 , 96 1) 2,220 ,3 53
--------------- ----------- --------- -------------- ------------ ------------ --------- ------------------ -----------
Zaim Credit Systems Group
Company Statement of Changes in Equity for the Year Ended 31 December 2021
(in British pounds sterling)
Shares to be
issued Additional Accumulated Share options Total
Charter capital Reserve capital deficit reserve equity
---------------- --------------- -------------- --------------- ----------------- -------------- -------------
Balance at 31
December 201 9 4,369,750 - 6,078,128 ( 692 , 987 ) 166,883 9,9 21 ,774
---------------- --------------- -------------- --------------- ----------------- -------------- -------------
Comprehensive
loss for 2020 - - - (576,000) - (576,000)
Contingent
consideration - 800 ,000 - - - 800,000
Share-based
payments - - - - 51,216 5 1,216
Balance at 31
December 2020 4,369,750 800,000 6,078,128 (1 ,268 , 9 8 7 ) 218,099 10 , 1 96,990
---------------- --------------- -------------- --------------- ----------------- -------------- -------------
Issue during the year 250,000 - 677,500 - - 927,500
Comprehensive loss for 202 1 - - - (57 1 , 3 0 5 ) - (57 1 , 3 0 5 )
Share-based payments - - - - 30,047 30 , 047
Balance at 31 December 2021 4,6 1 9,750 800,000 6,7 55 , 62 8 (1 ,840 , 292 ) 248,146 10 , 583 , 232
------------------------------ ----------- ------- ------------- --------------- ------- ---------------
Zaim Credit Systems plc
Consolidated Statement of Cash Flows for the
year ended 31 December 2021
(in British pounds sterling) 2021 20 20
---------------------------------------------------- ------------- -------------
Cash flows from operating activities
Interest received 7,578,606 4,219,635
Interest paid (340,811) (105,273)
( 11 , 886
Gains less losses from dealing in foreign currency ) (7, 460 )
2 ,233 ,
Other operating income 026 559,981
(1,5 82 ,
Staff costs 249 ) (1,854,393)
Operating expenses (2 , 263,521) ( 1, 226,365)
(55 , 613
Income tax paid ) -
Cash flows from/(used in) operating activities 5, 5 57
before changes in operating assets and liabilities ,5 52 1, 586,125
Net (increase)/decrease in operating assets
(6 , 0 8 ( 1,848,483
Loans to customers 3 , 920) )
112 , 5 6
Other assets 4 (109 ,06 3)
Net decrease in operating liabilities
Other liabilities 95 , 690 57 ,357
---------------------------------------------------- ------------- -------------
(318 , 11 (314 ,064
Net cash flows from operating activities 4 ) )
---------------------------------------------------- ------------- -------------
Cash flows from investing activities
Other loans issued (254 ,702) -
Purchases of property and equipment and intangible
assets (46,762) -
Net cash flows from investing activities (301,463) -
---------------------------------------------------- ------------- -------------
Cash flows from financing activities
( 2 6 1 ,
Repayment of lease liabilities 555 ) (536,120)
1, 5 78 ,
Loans received 78 6 259,266
( 78 9, 393
Repayment of loans received ) (259,266)
Issue of ordinary shares (including share premium) 1,000,000 -
Share issue costs (72,500) -
---------------------------------------------------- ------------- -------------
1,455 , (536 ,120
Net cash flows from financing activities 337 )
---------------------------------------------------- ------------- -------------
Effect of exchange rate changes on cash and
cash equivalents (2 , 722) (91 ,696 )
833 , 03 (941 ,880
Net change in cash and cash equivalents 8 )
Cash and cash equivalents at the beginning of
the year 640 , 871 1 ,582 ,751
---------------------------------------------------- ------------- -------------
Cash and cash equivalents at the end of the 1,473 ,
year (Note 5) 909 640, 8 71
---------------------------------------------------- ------------- -------------
Zaim Credit Systems plc
Company Statement of Cash Flows for the year ended 31 December
2021
(in British pounds sterling)
202 1 20 20
---------------------------------------------------- ------------- ------------
Cash flows from operating activities
(57 1 , 3
Loss for the period 0 5 ) (576,000)
Correction for non-cash transaction (charge
for share options granted) 30 , 047 51,216
Cash flows from/(used in) operating activities ( 541 , ( 524 , 78
before changes in operating assets and liabilities 258 ) 4)
Adjustments for
( 3 ,5 99
Increase in trade and other receivables , VAT ) ( 5 8,355)
Increase in trade and other payables 10 ,3 47 24,073
( 559 ,0
Cash generated from operations ( 5 34,510) 6 6)
---------------------------------------------------- ------------- ------------
(5 34 , (559,0 66
Net cash flows used in operating activities 510 ) )
---------------------------------------------------- ------------- ------------
Cash flows from investing activities
( 342 , 3
Investment in Subsidiary 2 0 ) (590,426)
( 342 ,
Net cash flows from investing activities 3 2 0 ) (5 90 ,426)
---------------------------------------------------- ------------- ------------
Cash flows from financing activities
Issue of ordinary shares (including share premium) 1,000,000 -
Share issue costs (72,500) -
---------------------------------------------------- ------------- ------------
Net cash flows from financing activities 927,500 -
---------------------------------------------------- ------------- ------------
Net change in cash and cash equivalents 50 , 670 (1,149, 492)
Cash and cash equivalents at the beginning of
the year 1 6 1, 163 1 , 310,655
---------------------------------------------------- ------------- ------------
Cash and cash equivalents at the end of the 2 11, 83
year (Note 5) 3 161,163
---------------------------------------------------- ------------- ------------
1. Principal Activities of the Group
The principal activity of Zaim Credit Systems plc ("the
Company") and its subsidiary Zaim-Express , LLC (together "the
Group") is the issuance of microloans to individuals (retail
customers). The Company was incorporated as Agana Holdings Plc and
registered in England and Wales on 15 June 2018 as a public limited
company with company registration number 11418575 and LEI,
213800Z4MI9KSZA2VW72 and on 22 July 2019 the Company changed its
name to Zaim Credit Systems Plc.
On 18 September 2019 the Company acquired the entire issued
share capital of Zaim-Express LLC. The Company is now the holding
company of a Russian based financial services company Zaim-Express
LLC (S ubsidiary), so the main function of the Company is to
provide holding company services and undertake management of their
listed activities on the stock exchange. These business
combinations in 2019 was stated in consolidated financial
statements as reverse acquisitions under IFRS 3.
The organisational structure of Group:
The share votes of the Company
--------------------------------
The name of Subsidiary Country of registration 31.12.2021 31.12.2020
----------------------- ------------------------- --------------- ---------------
Z aim-Express LLC Russia 100% 100%
The Subsidiary's principal activity is the issuance of
microloans through its network of branches in Russian cities
(mainly - in Moscow and the Moscow region, St. Petersburg). The
Subsidiary was entered in the state register of microfinance
organisations on 29 August 2011, registration number 2110177000440.
The Subsidiary's assets and liabilities are located in the Russian
Federation. The average number of Subsidiary's employees is as
follows:
The average number of Subsidiary's employees, by groups 2021 2020
---------------------------------------------------------- ---- ----
Central office 54 47
Call center 14 22
Other spe c ialists 70 143
---------------------------------------------------------- ---- ----
Total average number of employees 138 212
The average number of parent Company's employees (directors) is
as follows:
The average number of parent Company's employees 2021 2020
-------------------------------------------------- ---- ----
Directors 5 5
As at 31 December 2021, the main shareholder of the Company is
Zaim Holdings SA (with a 69.27 % equity holding; 31 December 2020 -
with a 73.23 % equity holding). The ultimate controlling party of
the Group is an individual - Mr. Siro Donato Cicconi
(Director).
2. Operating Environment of the Group
General
The economy of the Russian Federation continues to demonstrate
certain characteristics of an emerging market . They include, in
particular, inconvertibility of the Russian rouble in most
countries outside of Russia and relatively high inflation . The
current Russian tax, currency and customs legislation is subject to
various interpretations and frequent changes. The country's economy
depends on oil and gas prices. Russia continues to develop the
legal, tax and administrative infrastructure to meet the market
economy requirements. The economic reforms implemented by the
government are aimed at modernisation of the Russian economy,
development of high-tech production, improvement of labour
productivity and competitiveness of the Russian products on the
global market.
After a difficult 2020, when the issuance of microloans
decreased significantly against the background of coronavirus
restrictions and quarantine measures, the market began to show
recovery dynamics. According to the Central Bank, the total
portfolio grew by 7% in the second quarter of 2021, which already
corresponds to the average growth rate of the pre-pandemic
2019.
Market digitalisation and the growing popularity of the online
segment of microloans has become an important trend. According to
the Central Bank's estimates, over the past year, the share of
credit agreements concluded remotely increased in the quarter in
the total number of contracts to 71%. The number of companies that
now use online lending channels has also grown significantly.
As for the overdue debt on microloans, the situation as a whole
can be called stable. The rate of arrears with long delays in
payments reache d to 27.8% in the second quarter of 2021. This is
significantly lower than it was in mid-2020 and close to the
results of the pre-pandemic 2019
During the quarantine period, the Group changed its business
model to one of remote lending via the Internet. All operations
necessary for the performance of this activity were carried out by
the employees remotely, which allowed the Group to maintain
regularity and continuity of business processes. Based on the
analysis conducted, the Group's management believes that the
expected recession will not have any significant negative impact on
the Group's financial performance in the short term. The management
of the Group believes it is taking all the necessary measures to
support the sustainability and further development of the Group's
business operations in these circumstances.
As at 31 December 2021, the CBR's key rate was 8.50% (31
December 2020: 4.25%).
The future economic development of the Russian Federation is
largely dependent upon the effectiveness of economic measures,
financial mechanisms and monetary policies adopted by the
Government, together with tax, regulatory, and political
developments.
Inflation
The Russian economy experiences relatively high levels of
inflation. The inflation indices for the last five years are given
in the table below:
Inflation for
The year ended the period
----------------- --------------
31 December 2021 8 .39%
31 December 2020 4.9%
31 December 2019 3.0%
31 December 2018 4.3%
31 December 2017 2.1%
Foreign exchange transactions
Foreign currencies, especially the US Dollar, Euro, and British
pound sterling play a significant role in determining economic
parameters of many economic transactions carried out in Russia. The
table below shows the CBR exchange rates of RUB relative to USD and
EUR:
Date USD EUR GBP
----------------- ------- ------- ---------
31 December 2021 74.2926 84.0695 100.0573
31 December 2020 73.8757 90.6824 100.0425
31 December 2019 61.9057 69.3406 81.146
31 December 2018 69.4706 79.4605 88.2832
31 December 2017 57.6002 68.8668 77.6739
Management takes all necessary measures to ensure the
sustainability of the Group's operations. However, the future
impact of the current economic situation is difficult to predict
and management's current expectations and estimates may differ from
actual results.
For the purpose of estimating expected credit losses, the Group
uses forward-looking information, including projections of
macroeconomic variables. The Group takes these forecasts into
account when providing its best estimate of outcomes. However, as
with any economic forecast, the projections and likelihoods of
their occurrence are subject to a high degree of inherent
uncertainty and therefore the actual outcomes may be significantly
different from those projected. Note 6 provides additional
information on how the Group incorporates forward-looking
information in its expected credit loss models.
Functional and presentation currency
The functional currency is the currency that mainly influences
sales prices for goods and services (this will often be the
currency in which sales prices for goods and services are
denominated and settled) and which mainly influences labour,
material and other costs of providing goods or services (this will
often be the currency in which such costs are denominated and
settled) . The Group's functional currency is the Russian
rouble.
The presentation currency is the currency in which financial
statements are presented .
The consolidated financial statements are presented in British
pounds sterling. The reasons why the functional currency differs
from the presentation currency are the consolidation of Subsidiary
's financial statements with the parent Company accounts which have
been presented in GBP and investors' interests.
3. Basis of Presentation
General principles
The consolidated financial statements of the Group are prepared
in accordance with UK-adoped International Accounting Standards.
The Group maintains its records in compliance with the applicable
legislation of the United Kingdom. These financial statements have
been prepared on the basis of those accounting records and adjusted
as necessary in order to comply, in all material respects, with
UK-adopted International Accounting Standards.
On 1 January 2021, IFRS as adopted by the European Union at that
date was brought into UK law and became UK-adopted International
Accounting Standards, with future changes being subject to
endorsement by the UK Endorsement Board. The Company transitioned
to UK-adopted International Accounting Standards in its
consolidated financial statements on 1 January 2021. This change
constitutes a change in accounting framework. However, there is no
impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework
Going concern
These consolidated financial statements reflect the Group
management's current assessment of the impact of the Russian
business environment on the operations and the financial position
of the Group. The future economic direction of the Russian
Federation is largely dependent upon the effectiveness of measures
undertaken by the RF Government and other factors, including
regulatory and political developments which are beyond the Group's
control. The Group's management cannot predict what impact these
factors will have on the Group's financial position in future. As a
result, adjustments related to this risk have not been included in
the accompanying financial statements.
As at 31 December 202 1 , the Group has an accumulated deficit
of GBP 3 7 , 579 , 961 (20 20 : GBP 3 8 , 262 , 611 ) , and
incurred a net profit of GBP 682 ,650 during the year ended 31
December 2021 (20 20 : net loss GBP 614 ,5 1 9 ).
The Group's business activities together with the factors likely
to affect its future development, performance and position are set
out in the Chairman's Statement on page 4 and Chief Executive
Review on page 6. In addition, note 3 to the Financial Statements
includes the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives;
details of its financial instruments and its exposure to credit and
liquidity risk.
The Financial Statements have been prepared on a going concern
basis. The Directors have prepared cash flow forecasts for the 12
months from the date of signing of these Financial Statements.
There exists uncertainty as to the future impact of the COVID-19
pandemic as well as the potential impact on the Group from any
sanctions that might be imposed as a result of the EU, USA and UK
regarding the "special military operation" currently underway in
Ukraine. Both of these have been considered as part of the Group's
adoption of the going concern basis. The Board considers the
pandemic has not materially and/or adversely affected the prospects
of the business as of the date of this report, although any future
impact, should further waves of the pandemic occur and further
measures be implemented, remains hard to quantify.
Whilst it is the current view of the Directors that the
sanctions in place within Russia do not materially impact the
Group, it is a very fast moving situation with sanctions changing
rapidly and therefore there remains a risk to the business
predominantly around the access of banks not linked to the Russian
state and businesses not linked to the state operating in Russia
maintaining access to the international banking system and
specifically SWIFT as well as any capital controls within Russia as
a result of the potentially deteriorating economic situation driven
by the sanctions. Both access to SWIFT and potential and current
capital controls could restrict the ability of Subsidiary to remit
dividends and management fees to the parent Company, therefore
creating a material risk to the ability of the Company to continue
as a going concern. The Group has minimised this risk by reducing
expenditure to allow time for the situation to normalise, however
should these set of circumstances continue for an extended period
of time then the group would have to find alternative sources of
finance to fund the ongoing expenditure within the parent
Company.
The Directors formed a judgement at the time of approving the
Consolidated Financial Statements that although the operating
Subsidiary is operating profitably and generating free cash there
exists a material uncertainty regarding the Company's ability to
operate as a going concern. The Directors have plans to mitigate
such risk including obtaining alternative sources of capital and
have a reasonable expectation that these plans would be successful
and therefore continue to adopt the going concern basis in
preparing the Consolidated Financial Statements.
The CBR sets the minimum mandatory liquidity ratio at over 70%.
The Subsidiary meets the mandatory liquidity ratio: as of 31
December 2021, 181.89% (not audited) and 31 December 2020, 153.74%
(not audited).
As a result of considerations noted above, the Directors have a
reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of
accounting in preparing these Consolidated Financial
Statements.
Basis of consolidation and business acquisitions
On 18 September 2019 Company acquired the entire issued share
capital of Zaim-Express (LLC) by way of a share for share exchange.
The transaction was treated as a reverse acquisition and was
accounted for using the merger accounting method as the entities
were under common control before and after the acquisition.
A Subsidiary is an entity controlled by the Group. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the investee.
- Rights arising from other contractual arrangements.
- The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income, and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Other than for the acquisition of the Subsidiary as noted above,
the Group uses the acquisition method of accounting to account for
business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred, and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values as at the
acquisition date. Acquisition-related costs are expensed as
incurred unless they result from the issuance of shares, in which
case they are offset against the premium on those shares within
equity.
If an acquisition is achieved in stages, the acquisition date
carrying the value of the acquirer's previously held equity
interest in the acquiree is remeasured to its fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or a liability is recognised in accordance
with IFRS9 either in profit or loss or as a change in other
comprehensive income. The unwinding of the discount on contingent
consideration liabilities is recognised as a finance charge within
profit or loss. Contingent consideration that is classified as
equity is not remeasured, and its subsequent settlement is
accounted for within equity.
The excess of the consideration transferred and the fair value
as at the acquisition date of any previous equity interest in the
acquiree over the fair value of the Group's share of the
identifiable net assets acquired is recorded as goodwill. If this
is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is
recognised directly in profit or loss.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at cost less
impairment.
Subsidiaries and Acquisitions
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
recognised where an investor is expected, or has rights, to
variable returns from its investment with the investee, and has the
ability to affect these returns through its power over the
investee. Based on the circumstances of the acquisition an
assessment will be made as to whether the acquisition represents an
acquisition of an asset or the acquisition of business . In the
event of a business acquisition, the assets, liabilities and
contingent liabilities of a subsidiary are measured at their fair
value at the date of acquisition. Any excess of the cost of the
acquisition over the fair values of the identifiable net assets
acquired is recognised as a "fair value" adjustment.
If the cost of the acquisition is less than the fair value of
the net assets of the subsidiary acquired, the difference is
recognised directly in profit or loss. In the event of an asset
acquisition, assets and liabilities are assigned a carrying amount
based on relative fair value.
The results of subsidiaries acquired or disposed of during the
year are included in the statement of comprehensive income from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies into
line with those used by the Group.
Contingent consideration as a result of business acquisitions is
included in the cost at its acquisition date assessed value and, in
the case of contingent consideration classified as a financial
liability, remeasured subsequently through profit and loss.
Critical Accounting Estimates and Judgments in Applying
Accounting Policies
The Group makes estimates and assumptions that affect the
amounts recognised in the financial statements and the carrying
amounts of assets and liabilities in the next financial year.
Judgements that have the most significant effect on the amounts
recognised in the financial statements and estimates that can cause
a significant adjustment to the carrying amount of assets and
liabilities in the next financial year include:
Fair value of financial instruments
Information on the fair value of financial instruments measured
on the basis of assumptions that use observable market prices is
disclosed in Note 23.
ECL measurement
Calculation and measurement of ECLs is an area of significant
judgement and involves methodology, models and data inputs. The
methodology used by the Group for assessment of expected credit
losses is disclosed in Note 6. The following components of ECL
calculation have a major impact on the allowance for ECLs: default
definition, significant increase in credit risk (SICR), probability
of default (PD), exposure at default (EAD), loss given default
(LGD), macro-models and scenario analysis for impaired loans. The
Group regularly reviews and validates models and inputs to the
models to reduce any differences between expected credit loss
estimates and actual credit loss experience.
Significant increase in credit risk (SICR)
In order to determine whether there has been a significant
increase in credit risk, the Group compares the risk of a default
occurring over the expected life of a financial instrument at the
reporting date with the risk of default at the date of initial
recognition. IFRS 9 requires an assessment of relative increases in
credit risk rather than the identification of a specific level of
credit risk at the reporting date. In this assessment, the Group
considers a range of indicators, including behavioural indicators
based on historical information as well as reasonable and
supportable forward-looking information available without undue
cost and effort. The most significant judgments include identifying
behavioural indicators of increases in credit risk prior to default
and incorporating appropriate forward-looking information into the
assessment, either at an individual instrument, or on a portfolio
level.
Due to the coronavirus pandemic, the Group updated the
prospective information used in the models intended for the
assessment of expected credit losses and reassessed the Probability
of default during the 12 months for adequate reflection of the
uncertainties caused by the decrease in market prices and the
spread of the COVID-19 pandemic, taking into account:
- GDP drop and decline in income of individuals due to restricted economic activity;
- state support measures;
- real wage level;
- real disposable income of the population.
Determining business model and applying SPPI test
In determining the appropriate measurement category for debt
financial instruments, the Group applies two approaches : a
business model assessment for managing the assets and the SPPI test
based on contractual cash flow characteristics on initial
recognition to determine whether they are solely payments of
principal and interest. The business model assessment is performed
at a certain level of aggregation and the Group will need to apply
judgement to determine the level at which the business model
condition is applied .
The assessment of the SPPI criterion performed on initial
recognition of financial assets involves the use of significant
estimates in quantitative testing and requires considerable
judgement in determining whether quantitative testing is required,
what scenarios are reasonably possible and should be considered,
and in interpreting the outcomes of quantitative testing (i.e.
determining what represents a significant difference in cash
flows).
Substantial modification of financial assets
When the contractual terms of financial assets are modified
(e.g. renegotiated), the Group assesses whether the modification is
substantial and should result in derecognition of the original
asset and recognition of a new asset at fair value. This assessment
is based primarily on qualitative factors described in the relevant
accounting policy and requires significant judgment.
Recognition of a deferred tax asset
The recognised deferred tax asset represents the amount of
income tax that can be offset against future income taxes and is
recognised in the statement of financial position. A deferred tax
asset is recognized only to the extent that realisation of the
related tax benefit is probable. The future taxable profits and the
amount of tax benefits that are probable in the future are based on
medium-term forecasts prepared by management.
Changes in accounting policies
For accounting periods beginning on or after 1 January 2021, the
following amendments to the standards have entered into force:
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform - Phase 2;
-- Amendments to IFRS 16 Leases - Covid-19-Related Rent
Concessions beyond 30 June 2021.
These amendments to the standards did not have a significant
impact on the financial statements.
The IASB has issued a number of standards and amendments to
standards that will be effective in future reporting periods and
are not early adopted by the Company. The most significant of them
are the following:
-- Amendments to IFRS 16 Leases - COVID-19-Related Rent
Concessions (effective for annual periods beginning on or after 1
June 2020);
-- IBOR Reform and its Effects on Financial Reporting - Phase 2 (effective 1 January 2021);
-- Annual improvements to IFRSs - 2018-2020 Cycle (effective 1 January 2022);
-- Amendments to IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use (effective 1 January 2022);
-- Amendments to IAS 37 Provisions, Contingent Liabilities and
Contingent Assets - Onerous Contracts - Cost of Fulfilling a
Contract (effective 1 January 2022);
-- IFRS 17 Insurance Contracts (effective 1 January 2023);
Amendments to IAS 1 Presentation of Financial Statements and IAS
8 Accounting Policies, Changes in Accounting Estimates and Errors -
Classification of Liabilities as Current or Non-Current (effective
1 January 2023).
Unless otherwise described above, the new standards and
interpretations are not expected to significantly impact the
Group's financial statements.
4. Summary of Significant Accounting Policies
Fair value measurement
The fair value is the price that would be received when selling
an asset, or paid to transfer a liability in an orderly transaction
in the principal (or most advantageous) market at the measurement
date under current market conditions (i.e. an exit price)
regardless of whether that price is directly observable or
estimated using another valuation technique.
All assets and liabilities for which a fair value is recognised
or disclosed are categorised within the fair value hierarchy,
described as below, based on the lowest level input that is
significant to the fair value measurement as a whole:
- Level 1 - quoted market prices in an active market (that are
unadjusted) for identical assets or liabilities;
- Level 2 - valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable;
- Level 3 - valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are remeasured in the financial
statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between the Levels in the hierarchy
by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting period.
For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy as explained below (Note 23).
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, current
accounts and deposits with banks with original maturity of three
months or less. Cash and cash equivalents are stated at amortised
cost in the statement of financial position.
Financial instruments
Key measurement terms
Depending on their classification, financial instruments are
carried at fair value or amortised cost, as described below .
Fair value is the price that would be received when selling an
asset, or paid to transfer a liability in an orderly transaction
between market participants at the measurement date . Fair value
measurement assumes that the transaction to sell the asset or
transfer the liability takes place in the principal market for the
asset or liability or, in the absence of a principal market, the
most advantageous market for the asset or liability . Fair value is
the current bid price for financial assets or current ask price for
financial liabilities .
A mortised cost is the amount at which the financial asset or
financial liability is measured at initial recognition minus
principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between that
initial amount and the maturity amount, and for financial assets,
adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortised
cost of a financial asset , before adjusting for any expected
credit loss allowance .
The effective interest method is a method of calculating the
amortised cost of a financial asset or a financial liability and of
allocating or recognising the interest income or interest expense
over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash payments or receipts
over the expected life of the financial asset or financial
liability to the gross carrying amount of the financial asset or to
the amortised cost of a financial liability . When calculating the
effective interest rate, the Group shall estimate cash flows
considering all contractual terms of the financial instrument but
shall not consider future credit losses. The calculation includes
all fees and points paid or received between parties to the
contract that are an integral part of the effective interest rate,
transaction costs, and all other premiums or discounts. There is a
presumption that the cash flows and the expected life of a group of
similar financial instruments can be estimated reliably. However,
in those rare cases when it is not possible to estimate reliably
the cash flows or the expected life of a financial instrument, the
Group shall use the contractual cash flows over the full
contractual term of the financial instrument .
Initial recognition of financial instruments
The Group recognises financial assets and financial liabilities
in its statement of financial position when it becomes a party to
the contractual obligations of the respective financial instrument.
The regular way the purchase and sale of the financial assets and
liabilities is recognised is by using settlement date
accounting.
Classification and measurement of financial instruments
The Group classifies financial assets into the following
categories:
- financial assets at fair value through profit or loss;
- financial assets at fair value through other comprehensive income;
- financial assets measured at amortised cost.
Classification and subsequent measurement of debt financial
assets depends on:
1) the business model used by the Group to manage the asset;
and
2) characteristics of cash flows on the asset.
The business model is determined for a group of assets (on a
portfolio basis) based on all relevant evidence of activities that
the Group intends to undertake to achieve the objectives set out
for the portfolio available as at the measurement date.
Loans to customers meeting the SPPI criterion are held for the
purpose of collecting contractual cash flows and are carried at
amortised cost.
Reclassifications
Financial assets are not reclassified after initial recognition
unless the Group has changed its business model for managing
financial assets.
Financial liabilities are not reclassified after initial
recognition.
Derecognition
A financial asset is derecognised where:
-- the rights to receive cash flows from the asset have expired;
-- the Group has transferred its rights to receive cash flows
from the asset, or retained the right to receive cash flows from
the asset, but has assumed an obligation to pay them in full
without material delay to a third party;
-- the Group either has transferred substantially all the risks
and rewards of the asset or has neither transferred nor retained
substantially all the risks and rewards of the asset but has
transferred control of the asset. If the transferee has no
practical ability to sell the asset in its entirety to an unrelated
third party without needing to impose additional restrictions on
the transfer, the entity has retained control.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Loans to customers and other loans issued
Based on cash flow characteristics, the Group classifies loans
and advances to customers and other loans issued into the
measurement category:
1) at amortised cost: loans held to collect contractual cash
flows, if these cash flows are SPPI and are not classified at fair
value through profit or loss, are measured at amortised cost;
Loans to customers are recorded when cash is advanced to
borrowers. Impairment of loans at amortised cost or at FVOCI is
assessed using a forward-looking ECL model. The Group does not
acquire loans from third parties.
Impairment of financial assets : ECL allowance
The Group assesses, on a forward-looking basis, the ECL for debt
instruments measured at amortised cost and FVOCI and for the
exposures arising from credit related commitments and financial
guarantee contracts. The Group measures ECL and recognises credit
loss allowances at each reporting date. The measurement of ECL
reflects:
(i) an unbiased and probability weighted amount that is
determined by evaluating a range of possible outcomes,
(ii) time value of money, and
(iii) all reasonable and supportable information that is
available without undue cost and effort at the reporting date about
past events, current conditions and forecasts of future economic
conditions.
Debt instruments measured at amortised cost are presented in the
statement of financial position net of the ECL allowance.
The Group applies a three-stage model for impairment, based on
changes in credit quality since initial recognition, in accordance
with IFRS 9.
1) A financial instrument that is not credit-impaired on initial
recognition is classified into Stage 1. Financial assets in Stage 1
have their ECL measured at an amount equal to the portion of
lifetime ECL that results from default events possible within the
next 12 months (12m ECL).
2) If the Group identifies a significant increase in credit risk
(SICR) since initial recognition, the asset is transferred to Stage
2 and its ECL is measured based on a lifetime basis (lifetime ECL).
Refer to Note 3 for a description of how the Group determines when
a SICR has occurred.
3) If the Group determines that a financial asset is
credit-impaired, the asset is transferred to Stage 3 and its ECL is
measured as a lifetime ECL. Assets that are more than 60 days past
due are considered to be defaulted.
For financial assets that are purchased or originated
credit-impaired (POCI assets), the ECL is always measured as a
lifetime ECL.
Note 6 provides information about inputs, assumptions and
estimation techniques used in measuring ECL, including an
explanation of how the Group incorporates forward-looking
information in the ECL models .
Modification of financial assets
Sometimes the Group reviews or otherwise modifies the
contractual terms of financial assets. The Group estimates that the
modification of contractual cash flows is significant taking into
account, among other factors: the existence of new contractual
terms that indicate a significant change in interest rates, which
have a significant effect on the credit risk associated with the
asset, a significant extension of the loan term in cases where the
borrower is in financial difficulty.
If the modified terms significantly differ so that the rights to
cash flows from the original asset are deemed expired, the Group
derecognizes the original financial asset and recognizes the new
asset at fair value. The date of renegotiation is considered to be
the date of initial recognition for impairment calculation
purposes, including determination of whether credit risk has
increased significantly. The Group also evaluates the compliance of
the new loan with the criterion of making payments solely against
principal and interest. In situations where the renegotiation was
caused by the debtor's financial difficulties and inability to make
the originally agreed payments, the Group assesses whether the
modified loan is considered impaired on initial recognition. The
difference in the carrying amount is recognised in profit or
loss.
If the conditions of the modified asset do not differ
significantly, the modification does not result in derecognition.
The Group restates its gross carrying amount based on revised cash
flows by discounting the modified cash flows at the original
effective interest rate ( or credit-adjusted effective interest
rate for purchased or originated credit-impaired financial assets )
and recognises a gain or loss on modification in profit or
loss.
Loans received
Loans received include loans received from the participant and
are carried at amortised cost .
Property and equipment
Property and equipment are stated at cost, less accumulated
depreciation and impairment allowance.
At the end of the reporting period the Group assesses whether
there is any indication of impairment of property and equipment. If
such an indication exists, the Group estimates the recoverable
amount, which is determined as the higher of an asset's fair value
less costs to sell or its value in use . Where the carrying amount
of property and equipment is greater than their estimated
recoverable amount, it is written down to their recoverable amount
and the difference is charged as impairment loss to the statement
of profit or loss and other comprehensive income.
Gains and losses on disposal of property and equipment are
determined by reference to their carrying amount and recorded as
operating expenses in the statement of profit or loss and other
comprehensive income .
Repairs and maintenance are charged to the statement of profit
or loss and other comprehensive income when the expense is
incurred.
Depreciation
Depreciation of an asset begins when it is available for use.
Depreciation is charged on a straight-line basis over the following
useful lives of the assets:
-- Equipment - 2- 7 years.
Lease
The Group classifies its lease agreements as finance or
operating leases.
The right-of-use asset and the lease liability are recognized by
the lessee at the lease commencement date.
The original cost of the right-of-use asset includes the
following:
-- the amount of the initial measurement of the lease liability;
-- lease payments at or before the lease commencement date less any
lease incentives received;
-- any initial direct costs incurred by the Group; and
-- an estimate of costs to be incurred by the lessee in
dismantling, removing, restoring the site or restoring the
underlying asset to the condition required by terms of the lease,
unless those costs are incurred to produce inventories.
The right-of-use asset shall be amortised on a straight-line
basis over the shorter of the asset's useful life and the lease
term.
At the lease commencement date, the Group measures the lease
liability at the present value of the lease payments that have not
yet been made at that date. Lease payments shall be discounted
using the interest rate implicit in the lease if that rate can be
easily determined. If such rate cannot be easily determined, the
Group uses the incremental borrowing rate at the lease commencement
date.
If finance lease agreements provide for lease extension options,
the Group plans to use these options for 3 years.
At the lease commencement date, lease payments that are included
in the measurement of the lease liability consist of the following
payments for the right to use the underlying asset during the lease
term that have not yet been made at the lease commencement
date:
-- fixed payments (including in-substance fixed payments) less
any lease incentives receivable ;
-- variable lease payments that depend on an index or rate,
initially measured using an index or a rate as at the lease
commencement date;
-- the amounts expected to be payable by the lessee under the residual value guarantees;
-- the exercise price of a purchase option that the lessee is
reasonably certain to exercise; and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising an option to terminate the
lease.
After initial recognition, the right-of-use assets related to
property, plant and equipment shall be measured by the Group using
the historical cost model less accumulated depreciation and
accumulated impairment losses.
A right-of-use asset shall be assessed for impairment at the end
of each reporting year in accordance with IAS 36 Impairment of
Assets.
After initial recognition, the lease liability shall be
increased by the amount of accrued interest and decreased by the
amount of lease payments paid.
The carrying amount of the lease liability shall be remeasured,
if there is a change in future lease payments resulting from
changes in an index or a rate, there is a change in the amounts
expected to be payable under a residual value guarantee, or, as
appropriate, there is a change in the assessment of whether it is
reasonably certain that the purchase option or the lease extension
option will be exercised, or that the lease termination option will
not be exercised. The lease liability shall be remeasured to
reflect changes in lease payments.
When determining the lease term, the following periods shall be
considered, as well as the Group's management's assessment of the
probability that lease extension options and lease termination
options will be exercised:
-- the non-cancellable period of lease not subject to early termination;
-- periods covered by an extension option if exercise of that
option by the lessee is reasonably certain;
-- periods covered by a termination option if the lessee is
reasonably certain not to exercise that option.
As at the reporting date, right-of-use assets are disclosed in
the "Right-of-use assets" line item of the statement of financial
position. Lease liabilities are disclosed in the "Lease
liabilities" line item of the statement of financial position.
Finance costs are disclosed in the "Interest expense - lease
liabilities" line item of the statement of profit or loss and other
comprehensive income to provide a fixed periodic interest rate on
the remaining lease liability for each period. Depreciation of
right-of-use assets is disclosed in the "Operating expenses" line
item in the statement of profit or loss and other comprehensive
income. The cash outflow on the lease interest repaid is disclosed
in the "Cash from operating activities" section of the statement of
cash flows, and the amount of cash paid to repay the principal is
disclosed in the "Cash from financing activities" section of the
statement of cash flows.
Operating lease - the Group as lessee
A lease is classified as an operating lease if it does not
transfer substantially all the risks and rewards incidental to
ownership . The underlying asset is classified as a low-value asset
based on professional judgement.
Payments for short-term leases and low-value asset leases are
recognised as expenses on a straight-line basis over the lease term
and included into operating expenses in the statement of profit or
loss and other comprehensive income . A short-term lease has a
lease term of 12 months or less. Low-value assets represent leased
property with the value not exceeding the value limit determined by
the Group's accounting policy.
Lease payments under short-term leases or leases where the
underlying asset is of low value are recognized as an expense over
the lease term.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, and it is
probable that an outflow of resources embodying future economic
benefits will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made .
Taxation
The income tax charge/recovery comprises current tax and
deferred tax and is recorded in the statement of profit or loss and
other comprehensive income. Income tax expense is recorded in the
financial statements in accordance with the applicable legislation
of the Russian Federation . Current tax is calculated on the basis
of the estimated taxable profit for the year, using the tax rates
enacted during the reporting period .
Current tax is the amount expected to be paid to or recovered
from the taxation authorities in respect of taxable profits or
losses for the current or prior periods. Tax amounts are based on
estimates if financial statements are authorised prior to filing
relevant tax returns.
Deferred income tax is provided using the balance sheet
liability method for tax losses carried forward and temporary
differences arising between the tax bases of assets and liabilities
and their carrying amounts for financial statement purposes.
Income and expense recognition
Interest income and expenses are recorded in the statement of
profit or loss and other comprehensive income for all debt
instruments on an accrual basis using the effective interest
method. The effective interest method is a method of calculating
the amortised cost of a financial asset or a financial liability
and of allocating the interest income or interest expense over the
relevant period . The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts over
the expected life of the financial instrument to the net carrying
amount of the financial asset or financial liability . When
calculating the effective interest rate, the Group estimates cash
flows considering all contractual terms of the financial instrument
but does not consider future credit losses. The calculation
includes all commissions and fees paid or received by the parties
to the contract that are an integral part of the effective interest
rate, transaction costs, and all other premiums or discounts .
When loans become doubtful of collection, they are written down
to their recoverable amounts and interest income is thereafter
recognised based on the rate of interest that was used to discount
the future cash flows for the purpose of measuring the recoverable
amount.
Employee benefits and social insurance contributions
The Group pays social insurance contributions predominantly in
the Russian Federation. Social insurance contributions are recorded
on an accrual basis and comprise contributions to the Russian
Federation state pension, social insurance, and obligatory medical
insurance funds in respect of the Group's employees. The Group does
not have pension arrangements separate from the state pension
system of the Russian Federation. Wages, salaries, contributions to
the Russian Federation state pension and social insurance funds,
paid annual leaves and paid sick leaves, bonuses and non-monetary
benefits are accrued as the Group's employees render the related
service .
Foreign currency
(a) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Gains and losses on purchase and sale of foreign currency are
determined as a difference between the selling price and the
carrying amount at the date of the transaction.
(b) Group companies
The results and financial position of all the Group's entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
1. assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of the statement of financial position; 2. each component of profit
or loss is translated at average exchange rates during the
accounting period (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and 3. all resulting
exchange differences are recognised in other comprehensive
income.
5. Cash and Cash Equivalents
Group 202 1 2020
-------------------------------- -------- --------
Cash on hand 25 , 429 30,811
1,448 ,
Accounts with other banks 480 610,060
1,473
Total cash and cash equivalents , 909 640 ,871
-------------------------------- -------- --------
Company 202 1 2020
-------------------------------- -------- -------
21 1, 83
Accounts with other banks 3 161,163
21 1,
Total cash and cash equivalents 83 3 161,163
-------------------------------- -------- -------
As at 31 December 202 1 , the Group has 2 counterparties (20 20
: 2 counterparties) with balances exceeding 10% of total cash and
cash equivalents in the amount of GBP 1,175,168 (20 20 : GBP
524,431 ).
The table below presents the credit quality analysis of cash and
cash equivalents based on credit risk levels as at 31 December 202
1 .
Group Accounts with other banks Total
--------------------------------------------------- --------------------------- ------------
Minimum credit risk 1,448,48 0 1,448,48 0
Total cash and cash equivalents, less cash on hand 1,448 , 48 0 1,448 , 48 0
--------------------------------------------------- --------------------------- ------------
Company Accounts with other banks Total
--------------------------------------------------- --------------------------- ------------
Minimum credit risk 21 1 ,833 21 1 ,833
Total cash and cash equivalents, less cash on hand 21 1, 83 3 21 1, 83 3
--------------------------------------------------- --------------------------- ------------
The table below presents the credit quality analysis of cash and
cash equivalents based on credit risk levels as at 31 December
2020.
Group Accounts with other RF banks Total
--------------------------------------------------- ---------------------------- ---------
Minimum credit risk 610 , 060 610 , 060
Total cash and cash equivalents, less cash on hand 610,060 610,060
--------------------------------------------------- ---------------------------- ---------
Company Accounts with other RF banks Total
--------------------------------------------------- ---------------------------- ---------
Minimum credit risk 161 , 163 161 , 163
Total cash and cash equivalents, less cash on hand 161,163 161,163
--------------------------------------------------- ---------------------------- ---------
For the purpose of assessing expected credit losses, cash and
cash equivalent balances are included in Stage 1. The expected
credit losses on these balances represent insignificant amounts,
therefore, the Group does not create an ECL allowance for cash and
cash equivalents.
Below is the credit quality analysis of cash and cash
equivalents as at 31 December 2021 in accordance with ratings of
international agencies:
Group Fitch A+ Fitch BB+ S&P BBB- No rating assigned Total
-------------------------- ----------------- ---------- -------- ------------------- ------------
Accounts with other banks 107,883 103 , 950 39,353 1,197 , 29 4 1,448 , 48 0
Total 107,883 103,950 39,353 1,197 , 29 4 1,448 , 48 0
-------------------------- ----------------- ---------- -------- ------------------- ------------
Company Fitch A+ Fitch BB+ S&P BBB- No rating assigned Total
-------------------------- ----------------- ---------- --------- ------------------- -----------
Accounts with other banks 107,883 103 , 950 - - 2 11, 83 3
Total 107,883 103,950 - - 2 11, 83 3
-------------------------- ----------------- ---------- --------- ------------------- -----------
Below is the credit quality analysis of cash and cash
equivalents as at 31 December 2020 in accordance with ratings from
international agencies:
Group Fitch A+ Fitch BB S&P from BB- to BB+ No rating assigned Total
-------------------------- ----------------- --------- -------------------- ------------------- ----------
Accounts with other banks 54,936 - - 555,124 610,060
Total 54,936 - - 555,124 6 1 0 ,060
-------------------------- ----------------- --------- -------------------- ------------------- ----------
Company Fitch A+ Fitch BB S&P from BB- to BB+ No rating assigned Total
-------------------------- ----------------- --------- -------------------- ------------------- --------
Accounts with other banks 54,936 - - 106 ,227 161,163
Total 54,936 - - 106, 227 161,163
-------------------------- ----------------- --------- -------------------- ------------------- --------
6. Loans to Customers
Group 202 1 20 20
------------------------------------------- --------- ------------
36 , 469
Loans to customers , 024 28,298,290
(33 , 644
Less: ECL allowance , 307) (27,028,977)
------------------------------------------- --------- ------------
2 , 824
Total loans to customers at amortised cost , 717 1,269,313
------------------------------------------- --------- ------------
Company 202 1 20 20
------------------------------------------- ----- -----
Loans to customers - -
Less: ECL allowance - -
------------------------------------------- ----- -----
Total loans to customers at amortised cost - -
------------------------------------------- ----- -----
Below is analysis of movements in the ECL allowance during 202 1
(by type of loans specified in the first table of the Note):
Group Stage 1 Stage 2 Stage 3 Total
-------------------------- ------------- ----------- ----------- -------------
ECL allowance as at 1
January 20 21 201,494 589,300 26,238,183 27,028,977
Assets recognised for
the period 5,559,270 - - 5,559,270
Assets derecognised or
collected (3,885,890) (179,317) (998,466) (5,063,672)
Transfers to Stage 2 (323,372) 323,372 - -
Transfers to Stage 3 (1,153,409) (402,417) 1,555,826 -
Net loss on ECL allowance
charge/(reversal) 15,908 673,753 5,350,048 6,039,709
Effect of exchange rate
differences 2,702 5,253 72,068 80,024
ECL allowance as at 31
December 20 21 416,703 1,009,944 32,217,660 33,644,307
-------------------------- ------------- ----------- ----------- -------------
Analysis of movements in the ECL allowance during 20 20 is as
follows:
Group Stage 1 Stage 2 Stage 3 Total
-------------------------- ---------- ---------- ----------- -----------
ECL allowance as at 1
January 20 20 128,028 288,985 30,874,790 31,291,804
Assets recognised for
the period 697,907 - - 697,907
Assets derecognised or
collected (47,273) (33,654) (629,075) (710,002)
Transfers to Stage 2 (189,937) 189,937 - -
Transfers to Stage 3 (355,164) (187,618) 542,782 -
Net loss on ECL allowance
charge/(reversal) - 414,887 1,377,954 1,792,841
Effect of exchange rate
differences (32,067) (83,237) (5,928,268) (6,043,572)
ECL allowance as at 31 26 , 238 27 , 028
December 20 20 201 , 494 589 , 300 , 183 , 977
-------------------------- ---------- ---------- ----------- -----------
The ECL allowance for loans and advances to customers recognised
during the period is impacted by various factors. The table below
describes the main changes:
-- transfers between Stages 1 and 2 and Stage 3 due to
significant increases (or decreases) in credit exposure or
impairment during the period and subsequent increases (or
decreases) in the estimated ECL level: for 12 months or over the
entire period;
-- accrual of additional allowances for new financial
instruments recognised during the period, as well as reduction in
the allowance as a result of derecognition of financial instruments
during the period;
-- impact on ECL estimation due to changes in model assumptions,
including changes in the probability of default, EAD and LGD during
the period resulting from regular updating of the model inputs.
Following is the credit quality analysis of loans to customers
as at 31 December 202 1 :
Group Stage 1 Stage 2 Stage 3 Total
--------------------------------------------- --------- ----------- ------------- ------------
Loans to customers
Minimum credit risk 2,424,558 - - 2,424,558
Low credit risk - 134,596 - 134,596
Moderate credit risk - 994,691 - 994,691
High credit risk - 697,520 - 697,520
Defaulted assets - - 32,217,660 32,217,660
Total loans to customers before allowance 2,424,558 1,826,807 32,217,660 36,469,024
--------------------------------------------- --------- ----------- ------------- ------------
ECL allowance (416,703) (1,009,944) (32,217,660) (33,644,307)
--------------------------------------------- --------- ----------- ------------- ------------
Total loans to customers after ECL allowance 2,007,855 816,863 - 2,824,717
--------------------------------------------- --------- ----------- ------------- ------------
Following is the credit quality analysis of loans to customers
as at 31 December 20 20 :
Group Stage 1 Stage 2 Stage 3 Total
--------------------------------------------- ------------- ----------- ----------------- ----------------
Loans to customers
Minimum credit risk 1 , 222 , 507 - - 1 , 222 , 507
Low credit risk - 177 , 117 - 177 , 117
Moderate credit risk - 388 , 723 - 388 , 723
High credit risk - 271 , 760 - 271 , 760
Defaulted assets - - 26 , 238 , 183 26 , 238 , 183
Total loans to customers before allowance 1 , 222 , 507 837 , 600 26 , 238 , 183 28 , 298 , 290
--------------------------------------------- ------------- ----------- ----------------- ----------------
ECL allowance (201 , 494) (589 , 300) (26 , 238 , 183) (27 , 028 , 977)
--------------------------------------------- ------------- ----------- ----------------- ----------------
Total loans to customers after ECL allowance 1 , 021 , 012 248 , 300 - 1 , 269 , 313
--------------------------------------------- ------------- ----------- ----------------- ----------------
The ECL allowance for loans to customers recognized during the
period is impacted by different factors. Information on the
assessment of expected credit losses is disclosed in Note 3.
The Group uses the following approach to measurement of expected
credit losses:
-- portfolio-based measurement: internal ratings are assigned
individually, but the same credit risk parameters (e.g. PD, LGD)
are applied to similar credit risk ratings and homogeneous credit
portfolio segments in the process of ELC estimation.
This approach provides for aggregation of the portfolio into
homogeneous segments on the basis of specific information on
borrowers, such as delinquent loans, historic data on prior period
losses and forward-looking macroeconomic information.
The amounts of loans recognised as "past due" represent the
entire balance of such loans rather than the overdue amounts of
individual payments.
7. Lease
The Group has agreements for lease of premises .
The Group did not apply a simplified approach to recognise lease
modifications allowed due to the COVID-19 pandemic.
The carrying amount of right-of- use assets and its movements
during the period are presented below :
Group Real Estate Total
----------------------------------------- ------------ ----------
As at 1 January 202 1 297,925 297,925
Depreciation charge (220,267) (220,267)
M odifications and remeasurement 474,131 474,131
D erecognition (15,105) (15,105)
Effect of translation into presentation
currency 3,026 3,026
----------------------------------------- ------------ ----------
As at 31 December 202 1 539,709 539,709
----------------------------------------- ------------ ----------
Group Real Estate Total
-------------------------------------------------- ------------ ------------
As at 1 January 2020 2,549,233 2,549,233
Depreciation charge (661,165) (661,165)
M odifications and remeasurement (248,309) (248,309)
D erecognition (1,003,208) (1,003,208)
Effect of translation into presentation currency (338,626) (338,626)
-------------------------------------------------- ------------ ------------
As at 31 December 2020 297,925 297,925
-------------------------------------------------- ------------ ------------
The carrying amounts of lease liabilities and their movements
during the period are set out below:
Group
Lease liabilities Real Estate Total
----------------------------------------- ------------ ----------
As at 1 January 202 1 347,216 347,216
Interest expense on lease liabilities 15,228 15,228
Lease payments (276,786) (276,786)
4 62 ,30
M odifications and remeasurement 462,30 5 5
(16,5 96
D erecognition (16,5 96 ) )
Effect of translation into presentation
currency 2 ,316 2 ,316
----------------------------------------- ------------ ----------
As at 31 December 202 1 533,683 533,683
----------------------------------------- ------------ ----------
Group
Lease liabilities Real Estate Total
-------------------------------------------------- ------------ ------------
As at 1 January 2020 2,555,648 2,555,648
Interest expense on lease liabilities 92,442 92,442
Lease payments (628,563) (628,563)
M odifications and remeasurement (248,309) (248,309)
D erecognition (1,080,605) (1,080,605)
Effect of translation into presentation currency (343,397) (343,397)
-------------------------------------------------- ------------ ------------
As at 31 December 2020 347,216 347,216
-------------------------------------------------- ------------ ------------
The Group exercises options to extend signed lease agreements
for at least 3 years given the ongoing profitability of the loan
outlet (in the ordinary course of business). During the current
period, the Group exercised lease termination options. There were
no early termination penalties under these agreements.
8. Other Assets
Group 2021 20 20
------------------------------------- -------- --------
Other financial assets
Other loans issued to parent company 275 ,565 4 5 ,745
Settlements for rendered services 129,859 26,448
------------------------------------- -------- --------
Total other financial assets 405,424 72,193
------------------------------------- -------- --------
Group 202 1 20 20
--------------------------------- --------- --------
Other non-financial assets
Lease prepayments 2 4 ,062 23,062
Settlements with suppliers 29 , 614 35,211
5 , 40
Taxes other than income tax 0 110,980
Other receivables 12 , 049 32,0 0 1
( 2 0 ,9 ( 22,149
Less: impairment allowance 71) )
--------------------------------- --------- --------
Total other non-financial assets 5 0 , 154 179,104
--------------------------------- --------- --------
455 , 5
Total other assets 7 9 251,297
--------------------------------- --------- --------
Company 2021 20 20
-------------------------------------- ------- --------
Other financial assets
130 , 0
Other loans issued to related parties 76 45 , 745
Less: impairment allowance - -
-------------------------------------- ------- --------
130 ,
Total other financial assets 0 76 45 , 745
-------------------------------------- ------- --------
Company 2021 20 20
--------------------------------- ----- ---------
Other non-financial assets
Taxes other than income tax - 80 , 732
Less: impairment allowance - -
--------------------------------- ----- ---------
Total other non-financial assets - 80 , 732
--------------------------------- ----- ---------
130 ,
Total other assets 076 126 , 477
--------------------------------- ----- ---------
Analysis of movements in the impairment allowance for
non-financial assets during 202 1 is presented below:
Group Non-financial assets Total
------------------------------------------------------------- -------------------- ---------
Impairment allowance for other assets as at 1 January 2021 22,149 22,149
Impairment allowance charge during 20 2 1 (1 , 160) (1 , 160)
Effect of translation into presentation currency ( 18 ) ( 18 )
Impairment allowance for other assets as at 31 December
2021 20,971 20,971
------------------------------------------------------------- -------------------- ---------
Analysis of movements in the impairment allowance for
non-financial assets during 20 20 is presented below:
Group Non-financial assets Total
------------------------------------------------------------- -------------------- -----------
Impairment allowance for other assets as at 1 January 2020 15,932 15,932
Impairment allowance charge during 20 20 9 , 972 9 , 972
Effect of translation into presentation currency ( 3 , 754 ) ( 3 , 754 )
Impairment allowance for other assets as at 31 December
2020 22,149 22,149
------------------------------------------------------------- -------------------- -----------
The Group has no collateral for impaired assets recognised
within other assets.
9. Loans Received
Group 202 1 20 20
------------------------ --------- -------
Bank loans 803,772 -
Loan from related party 500,908 735,646
Total loans received 1,304,680 735,646
------------------------ --------- -------
Company 2021 2020
------------------------ ------------------------------- ----
Bank loan - -
Loan from related party - -
Total loans received - -
------------------------ ------------------------------- ----
On December 31, 2020, the Group entered into an agreement
changing the terms of the loan - starting from January 2021,
interest is accrued on the specified debt at a rate of 13.42% per
annum and the maturity of the specified debt is prolonged until
31.12.2023.
In 2021, the Group attracted short-term funds in rubles - under
loan agreements with JSC NOKSSBANK at a rate of 15% per annum.
The following is a reconciliation between the movements in loans
received and issued and cash flows generated from financing
activities.
Loans attracted
-------------------------------------------------- ----------------
As at 31 December 2019 742,603
Changes in financial flows
Loan received 259,266
Repayment of loans (259,266)
Loan offset (55,417)
Interest accrued 12,835
Interest paid (12,835)
Foreign exchange differences 199,489
Effect of translation into presentation currency (151,029)
-------------------------------------------------- ----------------
As at 31 December 2020 735,646
-------------------------------------------------- ----------------
Changes in financial flows
Loan received 1,578,786
Repayment of loans (789,393)
Interest accrued 154,674
Interest paid (325,578)
Foreign exchange differences (56,570)
Effect of translation into presentation currency 7,116
-------------------------------------------------- ----------------
As at 31 December 2021 1,304,680
-------------------------------------------------- ----------------
10. Other Liabilities
Group 2021 20 20
------------------------------------------- -------- -------
Other financial liabilities
Payables 437,712 326,692
Other settlements with customers on loan
's agreements 376,693 200,019
Other 10,245 7,195
Other non-financial liabilities
Taxes other than income tax 87,724 26,412
Income tax 63 , 237 -
Provision for unused vacations 122,447 104,353
Payables to employees and payroll related
taxes 186,253 159,159
1 ,2
8 4 ,3
Total other liabilities 12 823,830
------------------------------------------- -------- -------
Company 2021 2020
------------------------------------------- ------- ---------
Other financial liabilities
Payables 112,057 119,057
Other 27 27
Other non-financial liabilities
Payables to employees and payroll related 67, 65
taxes 85,002 5
Total other liabilities 197,086 1 8 6,739
------------------------------------------- ------- ---------
11. Charter and Additional Capital, Other reserves. Earnings per
share
As at 31 December 2018, the Charter capital states the amount of
Share capital of the Subsidiary - the authorised capital represents
the contribution made by the sole participant of the Subsidiary
.
D uring 2019 the reverse acquisition was stated in the
consolidated financial statements, as a result, the Charter capital
as at 31 December 2019 states the Share capital of the legal parent
Company, totalling GBP4,369,750. All the shares issued have equal
voting rights .
Below is a reconciliation of the movement in the legal parent
Company Share capital during 2019:
31 Dec
Group and Company 2018 Amount
Issued and fully paid Number , GBP
----------------------------------- ---------- -------
6 , 000
Ordinary shares of GBP0, 01 each , 000 60,000
6 ,000,000 60,000
----------------------------------- ---------- -------
For the year 2019 ( Ordinary shares issue of GBP0.01 each):
Group and Company Number Amount, GBP
320 , 000 3 ,200
Consideration shares (acquisition of Subsidiary) , 000 ,000
IPO 104 ,000,000 1,040,000
Fee shares 6 ,975,000 69,750
430 ,975,000 4 , 309,750
--------------------------------------------------- -------------- -----------
31 Dec
Group and Company 2019 Amount
Issued and fully paid Number , GBP
---------------------------------------------------- ------------- -----------
436 , 975
Ordinary shares of GBP0 . 01 each , 000 4,369,750
436 ,975,000 4,369,750
--------------------------------------------------- -------------- -----------
T here are no changes in the structure and amount of the share
capital during 2020.
During the first half of 2021, Group has completed an equity
fundraise of GBP1,000,000 (gross) through the issue of 25,000,000
ordinary shares at a price of 4.0 pence per ordinary share.
The Fundraise has been undertaken by way of a placing of new
ordinary shares of GBP0.01 par value in the share capital of the
Group. The Fundraise is to provide additional capital for expansion
of the loan portfolio and the development of new products .
Charter capital
Group Amount
Issued and fully paid Number , GBP
------------------------------------ ------------ ---------
As at 31 Dec., 2020 436 , 975
Ordinary shares of GBP0.01 each , 000 4,369,750
Issue of ordinary shares In 1H 2021 25,000,000 250,000
As at 31 Dece mber, 2021 461 ,975,000 4,619,750
------------------------------------- ------------- ---------
Additional capital
As at 31 December 2018 the amount of Additional capital stated
in the agreement on in-kind contribution (debt on the loan) of the
Subsidiary was - GBP29,122,880.
Amounts of Additional capital as at 31 December 2018 were
restated as at the date of the agreement on in-kind contribution
(debt on the loan).
Group
Date of exchange rate
for translation to Amount in Exchange
presentation currency RUB rate Amount in GBP
------------------------ --------- --------------
29.12.2018 2,561,820,344 87.9659 29,122,880
Total additional capital at
31 December , 2018 29,122,880
---------------------------------------- --------- --------------
As a result of the reverse acquisition , which was stated in the
consolidated financial statements in 2019, the Additional capital
as at 31 December 2019 of the legal parent Company was
GBP6,078,128.
Below there is reconciliation of movement in Additional capital
(share premium) of legal parent Company during 2019:
For the year 2019:
Group and Company
Amount, GBP
As at 1 January 2019 -
Premium arising on issue of ordinary shares 6,406,699
Issue costs (328,570)
As at 31 December 2019 6 , 078,128
---------------------------------------------- -----------
T here are no changes in the structure and amount of additional
capital during 2020.
During the first half of 2021, Group has completed an equity
fundraise of GBP1,000,000 (gross) through the issue of 25,000,000
ordinary shares at a price of 4.0 pence per ordinary share.
The Fundraise has been undertaken by way of a placing of new
ordinary shares of GBP0.01 par value in the share capital of the
Group .
Group
Amount, GBP
As at 1 January 2021 6,078,128
Premium arising on issue of ordinary shares
in 1H 2021 750,000
Issue costs (72,500)
As at 31 Dec e mber 2021 6 , 755,628
---------------------------------------------- -----------
Other reserves
Shares Share
to be option
issued Merger reserve Translation
Group Reserve reserve reserve
------------------------- ---- ---------- ------------- ---------- ------------
As at 31 December 2019 - 23 ,764,800 166,883 4,457,788
-------------------------- -------------- ------------- ---------- ------------
800 ,
Contingent consideration 000 - - -
Merger reserve - (800,000) - -
Share based payments - - 51,216 -
Translation differences - - - (67,563)
22 ,
As at 31 December 2020 800,000 9 64,800 218,099 4,390,225
------------------------------- ---------- ------------- ---------- ------------
Merger reserve - - - -
30 ,
Share based payments - - 047 -
21, 7
Translation differences - - - 6 4
22 , 2 4
As at 31 December 2021 800,000 9 64,800 8, 146 4,411,989
------------------------- -------- --------- -------- ---------
The merger reserve as at 31 December 2019 arose on consolidation
as a result of merger accounting for the acquisition of the entire
issued share capital of the Subsidiary during 2019 and represents
the difference between the value of the share capital issued for
the acquisition of the Subsidiary and investments made in the
Subsidiary and that of the acquired share capital of the
Subsidiary.
Share options reserve - this reserve represents cumulative
share-based payment expense for the Group's share option schemes.
See Note 12 Share-based payments.
Shares to be issued Reserve - this reserve represents shares to
be issues in respect of contingent consideration, see note 26
Business Combination for further details.
Currency translation differences relate to the translation of
the Subsidiary that have a functional currency different from the
presentation currency (refer note 2). Movements in the translation
reserve are linked to the changes in the value of the Russian Ruble
against the Pound Sterling: the business of the Group is located in
Russian Federation, and the Subsidiary's functional currency is the
Russian Ruble, which had substantial volatility against Sterling
during the year.
Accumulated deficit represents retained earnings .
Earnings per share . The basic earnings per share of 0.18p (2020
loss per share: 0.14p) is calculated by dividing the profit / loss
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the year.
Group 2021 2020
------------------------------------------- ------------------------ -------------------
Profit attributable to owners of the
parent 801,497 ( 614 ,519)
Weighted average number of ordinary 450, 125 ,
shares in issue 685 436,975,000
The diluted earnings per share for the years ended 31 December
2021 are 0.16p . The diluted earnings per share is calculated by
diving the profit attributable to owners of the parent by weighted
average number of ordinary shares in issue outstanding for the
effects of all dilutive potential ordinary shares .
The basic and diluted loss per share for the years ended 31
December 2020 are the same as the year 2020 result was a loss, the
options and warrants outstanding would be anti-dilutive. Therefore,
the dilutive loss per share for the year 2020 is considered the
same as the basic loss per shares.
Group 2021 2020
-------------------------------------------------- ------------------------- -------------------
Profit attributable to owners of the
parent 801,497 (614,519)
Weighted average number of ordinary
shares in issue outstanding for the
effects of all dilutive potential ordinary
shares 493,775,685 436,975,000
12. Share-based payments
In October 2019, a total of 32,250,000 options were issued to certain
directors, senior management and other advisers in recognition
of the work undertaken for Zaim prior to the IPO. In addition the
Company issued a total of 13,600,000 warrants to advisers in relation
to the funds raised at the time of the IPO. All the options were
issued with an exercise price of 2.5 pence per share and expire
after 5 years from the date of issue. 17,200,000 of the options
vest immediately and have no employment related conditions, the
remaining 15,050,000 vest over 1-2 years from the date of issue
and, should the individual end their employment, the options either
expire immediately or are valid for a further 6 months (depending
on the circumstances of the departure of the individual). All the
warrants have a contractual term of 3 years from the date of issue,
have no performance related terms attached and have a strike price
of 2.5 pence per share.
In addition to the options noted above as set out in the prospectus
at the time of the IPO the Directors have the discretion to issue
a further 10,750,000 options to key employees and consultants of
the Group as an incentivising tool to retain key individuals. As
at the date of this report these have not been issued and have
therefore not been included in the calculations. Neither the Company
nor the Group has any legal or constructive obligation to settle
or repurchase the options in cash.
Movements on number of share options and their related exercise
price are as follows:
On 24 September 2020, 2,000,000 options were issued to Paul Auger
a non-executive director of the company at a price of 2.7p. The
options vest equally over one year from the date of grant and express
after 5 years.
On 26 November 2020, 1,000,000 options were issued to an employee
of the Group at a price of 2.7p. The options vest equally over
2 years from the date of the grant and express after 5 years.
Weighted
N umber exercise
of options& price
warrants 2020,
Group 2020 GBP
--------------------------------- ------------ ---------
Outstanding at 1 January 2020 40 ,650,000 2 .50
Granted 3,000,000 -
Forfeited - -
2. 5
Outstanding at 3 1 December 2020 43,650,000 0
2. 5
Exercisable at 31 December 2020 34,200,000 0
--------------------------------- ------------ ---------
There was no issue of new options in 2021.
Weighted
N umber exercise
of options& price
warrants 2021,
Group 2021 GBP
--------------------------------- ------------ ---------
Outstanding at 1 January 2021 43 ,650,000 2 .50
Granted - -
Forfeited - -
2. 5
Outstanding at 3 1 December 2021 43,650,000 0
2. 5
Exercisable at 31 December 2021 42,150,000 0
--------------------------------- ------------ ---------
The options & warrants outstanding at 31 December 2021 had a weighted
average remaining contractual life of 2.8 years.
The fair value of the share options and warrants was determined
using the Black-Scholes valuation model.
The parameters used are detailed below.
For the year 2020:
2020
Group and Company Options
----------------------------------------------- ------------
Date of Grant 24 Oct 2020
Weighted average share price 2. 575 pence
Weighted average exercise price 2.70 pence
Weighted average fair value at the measurement 0 .7 2 penc
date
24 Oct 20 2
Expiry date 5
Options granted 3, 00 0,000
Volatility 30%
Dividend yield Nil
Option life 5 year
Annual risk free interest rate 2 . 83%
------------------------------------------------ ------------
13. Interest Income and Expense
Group 202 1 20 20
-------------------------------------- ---------- ---------
Interest income
9 , 528
Loans to customers , 856 4,857,496
Other loans issued to related parties 15 , 157 -
9 , 54
Total interest income 4,013 4,857,496
-------------------------------------- ---------- ---------
Interest expense
Loans received (154,674) (12,836)
Lease liabilities ( 15 ,228) (92,442)
Total interest expense (169,902) (105,277)
Net interest income 9,374,112 4,752,218
-------------------------------------- ---------- ---------
14. Gains less Losses from Dealing in Foreign Currency
Group 2021 20 20
---------------------------------------------- --------- ---------
Gain/loss on revaluation of financial assets (181 ,
and liabilities 23 , 961 466)
Realised gain/ (loss) from foreign exchange
transactions (3 , 019) (7 , 661)
Total gains less losses from dealing in 20 ,
foreign currency 943 (189,127)
---------------------------------------------- --------- ---------
15. Allowance for Expected Credit Losses / Impairment of Other
Assets
Group Note 2021 20 20
------------------------------------------- ---- ----------- -------
1 , 780
Loans to customers 6 6 ,53 5,306 , 746
Other assets 8 (1,160) 9 , 972
Total allowance for expected credit losses 1 , 790
/ impairment of other assets 6,534,146 , 718
------------------------------------------- ---- ----------- -------
16. Other Operating Income
Group 202 1 20 20
----------------------------------------------------- --------- --------
253 ,
Agent's fee 1,124,626 889
Information services 898,296 51 , 867
158 ,
Fines received under loan agreements 96,472 32 2
Effect of revaluation as a result of use of lease
options 13,735 -
Financial result from derecognition of lease assets 126 ,
and liabilities 4, 9 64 091
2 2 ,64
Other income 2 333
2,16
0 ,73 590 ,
Total other operating income 5 502
----------------------------------------------------- --------- --------
17. Staff Costs
Group 20 21 20 20
----------------------- ---------- -------
1 ,24 9 1 , 429
Salary ,155 , 920
380 ,
Payroll related taxes 3 17,899 523
1 , 810
Total staff costs 1 ,567,055 , 443
----------------------- ---------- -------
18. Operating Expenses
Group 202 1 20 20
------------------------------------- ------- ---------
Advertising and marketing 978,716 269,304
Consulting services 321,754 209,828
Depreciation of right-of-use assets 220,267 661,165
State duty 202,523 283,523
Communication 170,990 98,172
Banking services 153,485 87,558
Postal services 125,043 91,328
Investor Relations 91,642 181,456
Writing off VAT 70,583 -
Rental expenses 28,493 66,434
Material expenses 21,683 33,920
Security 9 , 555 22,023
Other expenses 228,311 111,025
2, 623
Total operating expenses , 045 2,115,735
------------------------------------- ------- ---------
19. Income Tax
In 2021 , the Group received taxable profit (as at 31 December
2020, the Company has no current income tax expenses). The current
income tax rate applicable to the majority of the Group's profit is
20% (2020: 20%).
A reconciliation between the theoretical and the actual taxation
charge is provided below.
Group 202 1 2020
--------------------------------------------------- ---------- ------------
801, 4 9 (614, 5 19
IFRS loss before taxation 7 )
Theoretical tax charge at the applicable statutory ( 1 60 ,
rate 2 9 9) 122,904
Non-deductible expenses and other differences 31 , 189 29 , 521
) Unrecognised deferred tax asset 10 , 263 (152 ,4 25)
Income tax expense for the year (118,847) -
--------------------------------------------------- ---------- ------------
The Company has a potential deferred tax asset of GBP 337,744
(2020: GBP153,847) as a result of trade losses to be offset against
future profits, should they arise.
Differences between IFRS and statutory taxation regulations of
the Russian Federation give rise to certain temporary differences
between the carrying amount of certain assets and liabilities for
financial statement purposes and for the Group's income tax
purposes.
Effect Change recognised
of exchange in profit
2020 rate differences and loss 2021
------------------------------------- ----------- ------------------ ------------------ -------------
Tax effect of deductible temporary
differences
( 30,089
Loans to customers 51 , 714 ( 394 ) ) 21,230
Other assets 8 , 390 14 1 , 173 9,577
Intangible assets 15 , 287 ( 9 ) (537) 14,740
Lease liabilities 69 , 443 463 36 , 830 106,737
Other liabilities - - - -
3 , 330 ( 2,208
Tax loss , 002 ) 38,844 3,366,638
------------------------------------- ----------- ------------------ ------------------ -------------
3 , 474 ( 2,135
D eferred tax assets , 8 3 6 ) 46,220 3,518,921
------------------------------------- ----------- ------------------ ------------------ -------------
Tax effect of taxable temporary
differences
( 8 , 906 (18,9
Other liabilities (9,942) (113) ) 61 )
Property and equipment (700) 2 175 (523)
Right-of-use assets under lease ( 47, 7
agreements (59,585) ( 605 ) 5 2) (107,942)
( 716 ( 56,483 (127,42
Gross deferred tax liabilities (70,227) ) ) 6 )
(2, 851
Total net deferred tax asset 3,404,608 ) (10,263) 3,391,495
------------------------------------- ----------- ------------------ ------------------ -------------
Unrecognised tax assets (3,404,608) 2,851 10,263 ( 3,391,495)
------------------------------------- ----------- ------------------ ------------------ -------------
Recognised tax liabilities - - - -
------------------------------------- ----------- ------------------ ------------------ -------------
Effect Change recognised
of exchange in profit
2019 rate differences and loss 2020
---------------------------------- --------- ------------------ ------------------ ------------
Tax effect of deductible
temporary differences
( 15 , ( 24 , 565
Loans to customers 91 , 779 500 ) ) 51 , 714
( 3 , 749 ( 12 , 752
Other assets 24 , 891 ) ) 8 , 390
( 1 , 234
Intangible assets - ) 16 , 521 15 , 287
511 , ( 68 , ( 373 ,
Lease liabilities 130 680 ) 007 ) 69 , 443
( 1 , 199 ( 8 , 517
Other liabilities 9 , 716 ) ) -
3 , 882 ( 734 , 3 , 330
Tax loss , 681 761 ) 182 , 082 , 002
---------------------------------- --------- ------------------ ------------------ ------------
3 , 474
4 , 520 ( 825 (220 , , 8 3
D eferred tax assets , 197 , 123 ) 2 38 ) 6
---------------------------------- --------- ------------------ ------------------ ------------
Tax effect of taxable temporary
differences
( 10,745
Other liabilities - 803 ) (9 , 942)
Property and equipment (1 , 857) 28 7 871 (700)
Right-of-use assets under (509 , (59 ,
lease agreements 846) 67 , 725 382 , 536 585)
(511 (70 ,
Gross deferred tax liabilities , 703) 68 , 815 372 , 663 227)
4 , 008 (756 ,
Total net deferred tax asset , 494 310) 152 , 425 3 , 404,608
---------------------------------- --------- ------------------ ------------------ ------------
(4 , (3 ,
008 , 756 , (152 , 404,608
Unrecognised tax assets 494) 310 4 2 5 ) )
---------------------------------- --------- ------------------ ------------------ ------------
Recognised tax liabilities - - - -
---------------------------------- --------- ------------------ ------------------ ------------
20. Risk Management
The risk management function within the Group is carried out in
respect of financial risks (credit, market, currency, liquidity and
interest rate), operational, and legal risks. The primary
objectives of the financial risk management function are to
establish risk limits and then ensure that exposure to risks stays
within these limits. The assessment of exposure to risks also
serves as a basis for optimal distribution of risk-adjusted
capital, transaction pricing and business performance assessment.
The operational and legal risk management functions are intended to
ensure proper functioning of internal policies and procedures to
minimise operational and legal risks.
Credit risk
The Group assumes a credit risk, namely the risk that a
counterparty will fail to meet its debt obligations within the
specified period. The Group has developed policies and procedures
for the management of credit exposures (both for recognised
financial assets and unrecognised contractual commitments),
including requirements for establishment and monitoring of the loan
portfolio concentration limits.
The credit policy establishes:
-- procedures for review and approval of loan applications,
-- methodology for assessment of the borrowers' solvency,
-- credit documentation requirements,
-- procedures for the ongoing monitoring of loans and other credit exposures.
The Group continuously monitors the status of individual loans
and regularly reassesses the creditworthiness of its customers. The
review is based on the most recent loan delinquency statistics
.
The Group applies the expected credit loss model for the purpose
of provisioning for financial debt instruments, the key principle
of which is timely reflection of deterioration or improvement in
the credit quality of debt financial instruments based on current
and forward-looking information.
The amount of the ECL recognised as a credit loss allowance
depends on the extent of credit quality deterioration since initial
recognition of a debt financial instrument .
Credit risk classification system . Each level of credit risk is
assigned a certain degree of solvency, using a single scoring
system:
-- minimum credit risk - high credit quality with low expected
credit risk, debt is not past due;
-- low credit risk - sufficient credit quality with average
credit risk, debt is prolonged and not past due;
-- moderate credit risk - average credit quality with
satisfactory credit risk, the debt is from 1 to 30 days past
due;
-- high credit risk - low credit quality with unsatisfactory
credit risk, high probability of default, the debt is from 31 to 60
days past due;
-- default - assets that meet the definition of default, the
debt is more than 60 days past due.
Expected credit losses on financial assets that are not impaired
are usually measured on the basis of default risk over one or two
different time periods, depending on whether there has been a
significant increase in the borrower's credit risk since initial
recognition.
The Group performs collective assessment of loans to
individuals. This approach provides for the aggregation of the
portfolio into homogeneous segments based on specific information
about borrowers, such as delinquent loans, historic data on prior
period losses and forward-looking macroeconomic information.
Collective assessment principles : for assessing risk stages and
estimating ECL on a collective basis, the Group combines its loans
into segments based on shared credit risk characteristics, so that
exposure within a grouping has a homogeneous pattern.
Market risk
The Group assumes a market risk. Market risk is the risk that
the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. Market risk
comprises currency risk, interest rate risk and other price risks.
Market risk arises from open positions in interest rates, currency
and equity financial instruments which are exposed to general and
specific market movements and changes in the volatility levels of
market prices.
The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while
optimising the return on risk .
Currency risk
Currency risk is the risk that the fair value or the future cash
flows of a financial instrument will fluctuate because of changes
in foreign currency exchange rates.
The Group accepts the risk of effect of foreign currency
exchange rate fluctuations on its financial position and cash
flows. Currency risk arises when the existing or prospective assets
in foreign currencies are greater or lower than the existing or
prospective liabilities in the same currencies. The Group's
management controls the exposure to currency risk on a regular
basis.
The table below provides the analysis of the Group's currency
risk as at 31 December 2021.
Group RUB GBP EUR Total
--------------------------------- --------- --------- -------- ---------
Assets
1 85 1 71 ,
Cash and cash equivalents 1,116,787 ,9 61 161 1,473,909
Loans to customers 2,824,717 - - 2,824,717
Property and equipment 20,319 - - 20,319
Right-of-use assets under lease
agreements 539,709 - - 539,709
Intangible assets 28,795 - - 28,795
275 ,
Other assets 180,013 - 5 6 5 455,579
Total assets 4,710,341 185,961 446,726 5,343,028
--------------------------------- --------- --------- -------- ---------
Liabilities
Loans received 803,772 - 500,908 1,304,680
Lease liabilities 533,683 - - 533,683
Other liabilities 1,087,226 197,086 - 1,284,312
Total liabilities 2,424,681 197,086 500,908 3,122,675
--------------------------------- --------- --------- -------- ---------
Net balance sheet position 2,285,661 (11,125) (54,182) 2,220,354
--------------------------------- --------- --------- -------- ---------
The table below provides the analysis of the Group's currency
risk as at 31 December 2020.
Group RUB GBP EUR Total
--------------------------------- --------- -------- --------- ---------
Assets
640,8
Cash and cash equivalents 479,708 161,095 68 71
Loans to customers 1,269,313 - - 1,269,313
Property and equipment 5,676 - - 5,676
Right-of-use assets under lease
agreements 297,925 - - 297,925
251, 29
Other assets 124,821 126,477 - 8
2,4 6
Total assets 2,177,443 287,571 68 5,083
--------------------------------- --------- -------- --------- ---------
Liabilities
Loans received - - 735,646 735,646
Lease liabilities 347,216 - - 347,216
Other liabilities 637,091 186,739 - 823,830
1,9 06
Total liabilities 984,307 186,739 735,646 ,692
--------------------------------- --------- -------- --------- ---------
Net balance sheet position 1,193,136 100,832 (735,578) 558 ,391
--------------------------------- --------- -------- --------- ---------
The table below presents a change in the financial result and
equity due to possible fluctuations of exchange rates used at the
end of the reporting period if all other conditions remain
unchanged. Reasonable exchange rate changes for each currency were
projected on the basis of historical information on maximum daily
exchange rate fluctuations in December 202 1 .
31 December 202 1
------------------------------------
Effect on
profit or loss before Effect on
Group taxation equity
----------------- ---------------------- ------------
EUR appreciation
by 2 0% ( 98 ,9 10 ) (7 9 , 128 )
EUR depreciation
by 20% 98 ,9 10 7 9 , 128
----------------- ---------------------- ------------
The table below presents a change in the financial result and
equity due to possible fluctuations of exchange rates used at the
end of the reporting period if all other conditions remain
unchanged. Reasonable exchange rate changes for each currency were
projected on the basis of historical information on maximum daily
exchange rate fluctuations in December 2020.
31 December 2020
---------------------------------
Effect on
profit or loss before Effect on
Group taxation equity
----------------- ---------------------- ---------
EUR appreciation
by 2 0% (147,129) (117,703)
EUR depreciation
by 20% 147,129 117,703
----------------- ---------------------- ---------
Liquidity risk
Liquidity risk arises when the maturity of assets and
liabilities do not match. The Group does not accumulate cash
resources to meet all liabilities mentioned above, as based on the
existing practice it is possible to forecast with a sufficient
degree of certainty the required level of cash funds necessary to
meet the above obligations.
To manage its liquidity, the Group is required to analyse the
level of liquid assets needed to settle the liabilities when they
mature, provide access to various sources of financing, draw up
plans to solve the problems with financing, and exercise control
over the compliance of the liquidity ratios with the statutory laws
and regulations.
The CBR sets and monitors liquidity requirements for
microfinance organisations. The Group calculates the liquidity
ratio in accordance with Instruction No. 5 114 -U of the Central
Bank of the Russian Federation "On establishment of economic
standards for a microloan company attracting loan funds from
individuals, including individual entrepreneurs who are founders
(participants, shareholders), and (or) legal entities" dated 2
April 2019. As at 31 December 2021 and 31 December 2020, the
minimum liquidity ratio was 70%. The Group provides the territorial
CBR division that supervises its activities with information on
mandatory liquidity ratios in accordance with the set format on a
quarterly basis as at the first day of each month. Also, if the
liquidity ratio values approach the limit set by the CBR, this
information is communicated to the Group's management. The Group
complies with the liquidity ratio as at 31 December 2021
(unaudited) and as at 31 December 2020 ( unaudited) .
The table below shows the maturity profile of financial
liabilities as at 31 December 202 1 :
From From
On demand From 6 months 1 to
and less 1 to 3 months to 1 3 years
than 1 month 3 months to 6 months year Total
-------------------------- ------------- --------- ------------ --------- --------- ----------
Liabilities
44 3, 7 86, 1, 3 77
Loans received 4,230 71,720 71,720 268 5 9 3 ,5 31
112 ,69 383,37 63 4 ,
Lease liabilities - 71,417 67, 169 0 5 650
Other liabilities 824,650 - - - - 824,650
-------------------------- ------------- --------- ------------ --------- --------- ----------
Total potential future
payments under financial 13 8 555,
liabilities 828,880 143,136 ,8 89 9 57 1,169,968 2 ,836,831
-------------------------- ------------- --------- ------------ --------- --------- ----------
The table below shows the maturity profile of financial
liabilities as at 31 December 2020:
On demand From From
and less From 6 months 1 to
than 1 1 to 3 months to 1 3 years
month 3 months to 6 months year Total
-------------------------- --------- --------- ------------ --------- -------- -------
Liabilities
Loans received - 51,582 77,373 154,745 618,982 902,682
Lease liabilities - 83,486 86,451 161,569 31,707 363,213
Other liabilities 533,909 - - - - 533,909
-------------------------- --------- --------- ------------ --------- -------- -------
Total potential future
payments under financial 1, 799
liabilities 533,909 135,068 163,824 316,314 650,689 , 804
-------------------------- --------- --------- ------------ --------- -------- -------
The Group does not use the above undiscounted amounts in the
maturity analysis to monitor the liquidity profile. Instead, the
Group monitors the expected maturity limits that are shown in the
table below as at 31 December 202 1 :
On demand No stated
and less From From From More maturity
than 1 to 3 to 6 months than 1
1 month 3 months 6 months to 1 year year Overdue Total
--------------------- --------- --------- --------- ---------- ------- ------- --------- ---------
Assets
Cash and cash 1 ,473 1,473
equivalents , 909 - - - - - - , 909
Loans to customers 2,592,265 - - - - 232,452 - 2,824,717
Property and
equipment - - - - - - 20,319 20,319
Right-of-use
assets under
lease agreements - - - - - - 539,709 539,709
Intangible assets - - - - - - 28,795 28,795
309 , 455 ,
Other assets 643 79 750 1,656 134,434 - 9,017 579
4,3
75 ,8 5, 343
Total assets 17 79 750 1,656 134,434 232,452 597,840 , 028
--------------------- --------- --------- --------- ---------- ------- ------- --------- ---------
Liabilities
Loans received 137,183 40,954 42,208 388,383 695,953 - - 1,304,680
3 30 ,
Lease liabilities - 63, 615 57, 402 82, 026 640 - - 533,683
1,161 1, 284
Other liabilities ,8 64 - - - - - 122,447 , 312
1, 299 1,026 3 , 122
Total liabilities , 047 104,568 99 ,610 470,409 ,592 - 122,447 , 675
--------------------- --------- --------- --------- ---------- ------- ------- --------- ---------
Net liquidity 3 ,
gap as at 31 076 , ( 104, ( 98,860 ( 468,754 (892 2, 220
December 2021 770 489) ) ) , 158) 232,452 475,393 ,3 54
--------------------- --------- --------- --------- ---------- ------- ------- --------- ---------
Cumulative liquidity 3 , 1, 512
gap as at 31 076 ,7 2, 972,2 2,8 , 509 1, 744 2, 220
December 2021 70 8 1 73,421 2, 404,667 , , 961 ,3 54
--------------------- --------- --------- --------- ---------- ------- ------- --------- ---------
The table below present the maturity profile of assets and
liabilities as at 31 December 2020:
On demand No stated
and less From From From More maturity
than 1 to 3 to 6 months than 1
1 month 3 months 6 months to 1 year year Overdue Total
--------------------- --------- --------- ---------- ---------- --------- ------- --------- ---------
Assets
Cash and cash 640,8 640,8
equivalents 71 - - - - - - 71
Loans to customers 1,168,937 - - - - 100,376 - 1,269,313
Property and
equipment - - - - - - 5,676 5,676
Right-of-use
assets under
lease agreements - - - - - - 297,925 297,925
156,7
Other assets 12 29 415 862 162 - 93,118 251,297
396,7
Total assets 1,966,520 29 415 862 162 100,376 20 2,465,084
--------------------- --------- --------- ---------- ---------- --------- ------- --------- ---------
Liabilities
Loans received - 27,345 54,270 113,642 540,389 - - 735,646
Lease liabilities - 77,397 81,779 157,129 30,911 - - 347,216
Other liabilities 719 ,477 - - - - - 104,353 823,830
Total liabilities 719,477 104,742 136,049 270,771 571,300 - 104,353 1,906,692
--------------------- --------- --------- ---------- ---------- --------- ------- --------- ---------
Net liquidity
gap as at 31 1,247,04
December 2020 3 (104,713) (135,634) (269,909) (571,138) 100,376 292,367 558,391
--------------------- --------- --------- ---------- ---------- --------- ------- --------- ---------
Cumulative liquidity
gap as at 31 736,78
December 2020 1,247,043 1,142,329 1, 006,695 7 165,648 266,024 558,391
--------------------- --------- --------- ---------- ---------- --------- ------- --------- ---------
Interest rate risk
The Group assumes the risk associated with the effects of
fluctuations in market interest rates on its financial position and
cash flows. Interest margins may increase as a result of such
changes but may also decrease or create losses in the event of
unexpected movements in interest rates.
The Group is exposed to interest rate risk primarily as a result
of its lending activities at fixed interest rates, in amounts and
for periods which differ from those of fixed interest rate
borrowings (Loans to customers as at 31 December 2021: 2, 824 , 7 1
7 and as at 31 December 2020: 1,2 6 9 ,3 13 British pounds sterling
and Other loans issued as at 31 December 2021: 275,565 and as at 31
December 2020: 45 ,745 British pounds sterling ) . In practice,
interest rates for Loans to customers are usually set for short
periods. In addition, interest rates recorded in both asset and
liability contracts are often revised by mutual agreement in
accordance with current market conditions. I n 20 21 the maximum
daily interest rate for Loans to customers was limited to 1% per
day (in 2020 - to 1% per day) .
Also, the Group's lease liabilities are exposed to interest rate
risk (as at 31 December 2021: 533,683 and as at 31 December 2020:
347 , 21 6 British pounds sterling) and loans received are exposed
to interest rate risk (as at 31 December 2021:1,304,680 British
pounds sterling and as at 31 December 2020 there are no such
liabilities )
Other assets and liabilities are not exposed to interest rate
risk.
21. Capital management
The Group's objectives when managing capital are to comply with
the capital requirements set by the Central Bank of Russia , as the
main area of business of the Group is in the Russian Federation ,
and to ensure the Group's ability to continue as a going concern
and maintain a capital base at the level necessary to achieve the
capital adequacy ratio of 5% in accordance with the CBR
requirements.
The Group provides the territorial division of the CBR
supervising its operations with information on the mandatory
capital adequacy ratio in accordance with the established format
quarterly as at the first day of each month.
The statutory requirements for own funds (equity) as at 31
December 202 1 are set at two million roubles ( as at 31 December
2020 are set at one million roubles ) . The Group is in compliance
with the above requirements.
22. Contingencies
Litigations. In the ordinary course of business, the Group is
subject to legal actions and complaints. Management believes that
the ultimate liability, if any, arising from such actions or
complaints will not have a material adverse effect on the Group's
financial condition or the results of its future operations.
Tax legislation. As the main business of Group is in Russia ,
Russian tax legislation is subject to varying interpretations, and
changes, which can occur frequently. Management's interpretation of
such legislation as applied to the transactions and activities of
the Group's companies may be challenged by the relevant regional or
federal authorities. Current trends in the Russian Federation
suggest that the tax authorities are taking a more assertive
position in their interpretation of the legislation and
assessments. As a result, tax authorities may challenge
transactions and accounting methods for which they have not
previously challenged. As a result, significant additional taxes,
penalties, and fines may be assessed.
As at 31 December 2021, management believes that its
interpretation of the relevant legislation is appropriate and the
Group's tax, currency and customs positions will be sustained by
the regulatory authorities. Management believes that the Group has
accrued all relevant taxes.
Operating lease commitments. In the course of its business, the
Group enters into a number of lease agreements. These agreements
are not irrevocable. As at 31 December 2021 and at 31 December
2020
the Group has no Operating lease commitments .
23. Fair Value of Financial Instruments
A quoted market price in an active market is the best evidence
of fair value . As no readily available market exists for the major
part of the Group's financial instruments, their fair value is
based on current economic conditions and the specific risks
attributable to the instrument. The estimates presented below are
not necessarily indicative of the amounts the Group could realise
in a market exchange from the sale of its full holdings of a
particular instrument.
Below is the estimated fair value of the Group's financial
instruments as at 31 December 2021 and
31 December 2020:
2021 20 20
--------------------- ---------------------
Carrying Carrying
Group value Fair value value Fair value
Financial assets
Cash 1,473,909 1,473,909 640,871 640,871
Loans to customers 2,824,717 2,824,717 1,269,313 1,269,313
Other assets (loans issued
to parent compa n y) 275,565 275,565 45,745 45,745
Financial liabilities
1 ,304 1 ,304 ,6
Loans received ,6 80 80 735,646 735,646
Other liabilities 824 , 650 824 , 650 533,907 533,907
--------------------------- --------- ---------- --------- ----------
The Group uses the following methods and assumptions to estimate
the fair value of these financial instruments:
Cash and cash equivalents. The estimated fair value of cash and
cash equivalents does not differ from their carrying amounts due to
the nature of these financial instruments.
Loans to customers and l oans issued to parent company . Loans
to customers and loans issued to parent company are reported net of
impairment allowance. The estimated fair value of loans to
customers and other loans issued represents the discounted amount
of estimated future cash flows expected to be received. To
determine fair value, expected cash flows are discounted at current
market rates (the interest rate on loans to customers in 2021 was
1% (2020 - 1%), the interest rate on the loans issued to parent
company was 8.7% and 3% in 2021 (3% in 2020).
Loans received. The fair value of other fixed interest-bearing
borrowed funds is based on discounted cash flows using interest
rates for instruments with similar maturity and in similar
currency. The lending rates are equal to the market rates .
To present information on the fair value hierarchy of financial
instruments as required by IFRS 13 Fair Value Measurement, the
management of the Group assigns the above financial assets and
liabilities as at 31 December 2021 and 31 December 2020, excluding
cash and cash equivalents (Level 1 = GBP 1 , 4 73 , 909 at 31
December 202 1 and GBP 640,871 at 31 December 2020) to Level 3 of
the fair value hierarchy of inputs.
24. Reconciliation of Classes of Financial Instruments with
Measurement Categories
In accordance with IFRS 9 "Financial Instruments", the Group
classifies its financial assets and liabilities into the following
categories: (a) financial assets at fair value through profit or
loss; (b) financial assets at fair value through other
comprehensive income; and (c) financial assets at amortised
cost.
At the same time, in accordance with the requirements of IFRS 7
"Financial Instruments: Disclosures", the Group discloses various
classes of financial instruments.
As at 31 December 202 1 and 31 December 20 20 , all financial
assets and liabilities of the Group are classified as financial
assets and liabilities measured at amortised cost.
25. Related Party Transactions
For the purposes of these consolidated financial statements,
parties are considered to be related if one party has the ability
to control or exercise significant influence over the other party
in making financial or operational decisions as defined by IAS 24
Related Party Disclosures. In considering each possible related
party relationship, attention is directed to the economic substance
of the relationship, not merely the legal form.
In the normal course of business, the Group enters into
transactions with its sole participant and directors. These
transactions include settlements, payment of remuneration to
employees, and loan draw downs. According to the Group's policy,
the terms of related party transactions are equivalent to those
prevailing in arm's length transactions.
The outstanding balances at the year end and liability
transactions with related parties for 20 21 are as follows:
Transactions with ultimate beneficiary 202 1 20 20
--------------------------------------- ----------------------------------- -------------
Loan to beneficiary - (55,559)
Loan offset - 55,559
--------------------------------------- ----------------------------------- -------------
Transactions with parent company
Other loan issued
------------------------------ --------------------------------
As at 31 December 2019 -
Changes in financial flows
Loan issuance 45,411
Accrued interest 334
As at 31 December 2020 45,745
------------------------------ --------------------------------
Changes in financial flows
Loan issuance 254,702
Loan repayment (25,194)
Accrued interest 15,157
Exchange rate differences (16,691)
Impact of conversion into reporting currency 1,847
---------------------------------------------- ---------
As at 31 December 2021 275,565
---------------------------------------------- ---------
Loans received
---------------------------------------------- -----------------------------
As at 31 December 2019 742,603
Changes in financial flows
Offset of loan claims (55,417)
Exchange rate differences 199,489
Impact of conversion into reporting currency (151,029)
---------------------------------------------- -----------------------------
As at 31 December 2020 735,646
---------------------------------------------- -----------------------------
Changes in financial flows
Accrued interest 84,225
Interest paid (259,305)
Exchange rate differences (56,570)
Impact of conversion into reporting currency (3,087)
---------------------------------------------- -----------------------------
As at 31 December 2021 500,908
---------------------------------------------- -----------------------------
No interest was accrued on loan received in 2020. As at 31
December 2020 and at 31 December 2019, the balance on loans
received represents the obligation to pay interest on the loan ,
which was forgiven in 2018. On December 31, 2020, the Group entered
into an agreement changing the terms of the loan - starting from
January 2021, interest is accrued on the specified debt at a rate
of 13.42% per annum and the maturity of the specified debt is
prolonged until 31 December, 2023.
For the year ended 31 December 2020, the total remuneration of
key management personnel of the Subsidiary was GBP 304 , 677,
including insurance premiums of GBP 47 , 392 (2020: GBP 274 , 281,
including insurance premiums of GBP 44 , 106). The Group does not
provide key management personnel with post-employment and
employment termination benefits. The remuneration of the Board of
Directors of the Group for the year 2021 was as follows:
Below is the summary of remuneration for each Director for
2021:
Salary, GBP Bonus for Shares held Stock options
, for the the year
year 202 1 202 1
Malcolm Groat 25,000 4,000 0 2,150,000
------------ ---------- ------------- --------------
Siro Donato
Cicconi 100,000 35 ,000 320,000,000 10,750,000
------------ ---------- ------------- --------------
Vladimir Golovko 14 1 , 038 3,500 0 8,600,000
------------ ---------- ------------- --------------
Simon James
Retter 60,000 21,000 4 , 9 00,000 6,450,000
------------ ---------- ------------- --------------
Paul James
Auger 20,000 4,000 0 2 ,000,000
------------ ---------- ------------- --------------
The social insurance contributions , paid by the Company for the
year 2021 on remuneration, was GBP17,388 (2020 - GBP17,388).
Out of pocket expenses totalling GBP78,055 were incurred by Siro
Donato Cicconi in 2019 and as at 31 December 2021 GBP48,055
remained payable ( as at 31 December 2020 : GBP48,055 ) .
26. Business combination
On 19 September 2019 Zaim Credit Systems plc (Parent Company)
became the legal parent of Zaim Express LLC (Subsidiary) by way of
reverse acquisition. The cost of the acquisition is deemed to have
been incurred by Zaim Express LLC, the legal subsidiary, in the
form of equity instruments issued to the owners of the legal
parent. This acquisition has been accounted for as a reverse
acquisition as described in Note 3, Basis of Preparation.
The fair value of the shares in Zaim Express LLC have been
determined from the admission price of the Zaim Credit Systems plc
shares on re-admission to trading on the LSE for 2.5 pence per
share. The value of the consideration shares was GBP8,000,000. The
fair value of the notional number of equity instruments that the
legal subsidiary would have had to have issued to the legal parent
to give the owners of the legal parent the same percentage
ownership in the combined entity is 1.84 per cent of the market
value of the shares after issues, being GBP150,000. The difference
between the notional consideration paid by Zaim Credit Systems plc
for Zaim Express LLC and the Zaim Credit Systems plc net assets
acquired of GBPnil has been charged to the Consolidated Statement
of Comprehensive Income as a deemed cost of the listing amounting
to GBP150,000 with a corresponding entry to the reverse acquisition
reserve.
Details of net assets acquired and the deemed cost of the
listing were as follows:
GBP
Consideration effectively received 150,000
Less net asset required:
Cash and cash equivalents 52,055
Debtors and prepayments 11,982
Current liabilities (64,037)
Total net asset required: -
Deemed cost of listing 150,000
T he terms of the share purchase agreement between the Company
and Zaim Express LLC were as follows : there are certain
circumstances under which deferred contingent consideration might
become payable. Should the Company record a monthly EBITDA figure
in accordance with IFRS of GBP200k per month for a continuous
period of four months and there be no reasonable expectation that
this should fall below this level for a further period of six
months then a further 16,000,000 new ordinary shares in the Company
shall become payable. Additional consideration of 16,000,000 shares
over and above that already mentioned shall become payable should
the Company record a monthly EBITDA figure of GBP350k per calendar
month with the same continuous period clause as noted above. At the
IPO price per share these deferred contingent considerations would
have a value of GBP400k each for a combined value of GBP800k. It
has been considered by the Directors at this time that, in light of
the Covid-19 pandemic it remains difficult to predict if and when
this might occur. This combined with the current low probability of
these milestones being met in the current environment, mean t that
no fair value has been calculated for such deferred
considerations.
Under the terms of the share purchase agreement between the
Com-pany and Zaim Express LLC ( Subsidiary) there are certain
circumstances under which deferred contingent consideration might
become payable. Should the Company record a monthly EBITDA figure
in accordance with IFRS of GBP200k per month for a continuous
period of four months and there be no reasonable expectation that
this should fall below this level for a further period of six
months then a further 16,000,000 new ordinary shares in the Company
shall become payable. Addition-al consideration of 16,000,000 over
and above that already mentioned shall become payable should the
Company record a monthly EBITDA figure of GBP350k per calendar
month with the same continuous period clause as noted above. At the
IPO price per share these deferred contingent considerations would
have a value of GBP400k each for a combined GBP800k in value. It
has been considered by the Directors that given the improvement in
outlook for the business that this additional consideration is
likely to become payable in the near future and therefore a reserve
of shares to be issued has been recognised and associated increase
in carrying value of the investment in Zaim Express LLC
(Subsidiary) as a result of this consideration.
27. Auditor's remuneration
31.12.21 31.12.20
Audit GBP GBP
Fees payable to the company's
auditor for the audit of the
annual parent company and consolidated
accounts 40,000 40,000
Fees payable to the company's - -
auditor for other services provided
to the company and its subsidiaries:
The audit of the company's subsidiaries - -
under legislative requirements
--------------- -----------
Total audit 40,000 40,000
=============== ===========
28. Events after the Reporting Period
Since February 2022, there has been an increase in geopolitical
tensions, which created significant risks for the Russian economy
and led to significant fluctuations in exchange rates and a
decrease in the value of the Russian assets in financial markets.
Taking into account the information available at the moment, the
possible impact of these events both on the economy of the Russian
Federation as a whole and on its individual industries is not
readily predictable. As a result, there is no possibility of
estimating the financial impact of these events on the Company's
activities with a sufficient degree of reliability in the short
term. The Company is closely monitoring the development of the
situation to make an alternative assessment of its strategic and
operational intentions and plans in the event of any indicators of
a negative impact on its activities.
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FR BKOBQPBKDQPD
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May 18, 2022 02:00 ET (06:00 GMT)
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